My prediction is that in the cities, things mostly won’t change. In rural or suburban areas, cost and wait times will explode, if service is offered at all.
With minimum wage enforced, waiting in areas where drivers don’t make minimum wage on average will vanish since scheduled services are risk adverse and have lots of information. Before drivers might service those areas hoping to get a ride taking them to urban areas. Drivers don’t have good statistics on where to wait. Coordinated services do.
> In rural or suburban areas, cost and wait times will explode,
Utilization of ridesharing in rural areas is low[1]. It's a mode of transportation mostly used by urban affluent individuals with plenty of expendable income and as far as other reasons are concerned internet and credit card access trump any sort of supply problem.
"Suzanne Ashe was once the only Uber driver in Haines, Alaska — population 1,374 — and said she kept getting kicked off the platform because there weren’t enough people asking for rides. She also found that some places weren’t on Uber’s maps, so clients couldn’t enter their destination, and internet could be spotty.
For these reasons, Ashe quit Uber and started her own ride-hailing business called Red Cab, named for her 2010 Red Chevy HHR, the only car in her “company.” She charges a flat rate of $10 per ride and $30 per hour. “In order to cater to rural areas, especially areas where there isn’t a saturation of network, then a cab company makes a lot more sense,” she told Chilkat Valley News."
It seems to have become fashionable to rush to Ubers defense by framing it as some sort of necessary mode of transportation for the undersupplied when instead every piece of data suggests the opposite. It's luxury transportation for the upper middle-class on the back of disenfranchised metropolitan army of reserve labour.
I don't see Uber as class- or luxury-related at all. They have all kinds of customers. Sure they have affluent customers but e.g. college students actively seek each other to split Uber fares too. Many people would prefer to drive instead of taking an Uber, but they do the latter because often there's something preventing them from so (like lack of parking space, or any car to begin with). Are cars luxury upper middle-class commodities now too?
And when utilization is high, ride-sharing is arguably more carbon-friendly too. The same affluent folks you're talking about could be driving a car instead of sharing rides with other people if they were left with that option. Even if you think ride-sharing is somehow a sign of affluence (which it very obviously isn't, if you've lived in other countries where entire cities function on hitching rides with strangers every day), you shouldn't want to discourage it and look on people using it with disdain.
"it's not a class related thing"
"Students will actively look to split the cost"
So, kind of like, a class thing then? Where the lower classes can't afford it on their own and need to pool their resources together.
"Ride sharing is more carbon friendly"
Public transit is carbon friendly. Ride sharing in the case of uber where you're usually alone in the car, and the driver spends his entire day driving is not carbon friendly. By having people that need to drive all day long, and by making it so that a car is always available instead of better alternatives, it's even a net negative.
"Entire cities function on hitching rides with strangers"
The only minor difference is, once again, the cost. Let's take the Philippines for example. Grab replaces Uber over there, but the prices are still prohibitive for anyone who's not middle class. Jeepneys are basically privatised public transit. Tricycles are only used for short trips and people hop between them. The average person doesn't take Ubers all day long.
Not sure why you're being downvoted. A lot of the Uber/Lyft users I know were (pre-Covid) Uber Pool/Lift Line users. Cramming into a car with strangers that takes 2-3 diversions on the way to your final destination isn't really luxury; it's a stop-gap for when the trip you're making is underserved by transit.
For my lifestyle, owning a car would be the "luxury", not ride sharing.
$2000 is a prohibitively expensive amount for a nontrivial number of people. Not to mention that doesn’t take into account price of gas, parking, maintenance (for which a $2000 car will most likely need more of than a brand new car), registration, insurance...
More than 10% of Americans live below the federal poverty line (individual income of <$12k, family of 4 income less than <$26k)
What exactly are you arguing against here? So a $2k car is not affordable by the 10% of the population below the federal poverty line... therefore it's an upper middle-class luxury?
You're arguing a car isn't a class line in the United States, and you've completely forgotten the ~8 of adult Americans who don't have a car at all for transportation.
> You're arguing a car isn't a class line in the United States, and you've completely forgotten the ~8 of adult Americans who don't have a car at all for transportation. Maybe it's a class thing.
Or maybe it isn't. No, I haven't "forgotten" them. When some 90% of American households have access to a car, that's a pretty darn clear signal cars aren't a class luxury. It just means those in the lowest economic classes can't afford them, just like they have trouble affording so many other things.
You do realize for comparison some 36 million people are on food stamps? Meaning they need assistance to even put food on the table? That doesn't make food a "class thing" in any meaningful way. And neither is a car. Especially not an "upper middle-class luxury".
That works great if you have solid mechanic skills and you get the type of car that can be easily worked on. Otherwise, it's kind of a sketchy dice-roll, which is why certified pre-owned cars are a thing.
The problem is often not the purchase price but the ongoing maintenance, insurance and parking fees. In a big city, the problem isn't to buy the car but to find a place for it; even if parking near your home is solved the car is still very much a burden when you go in the city centre as you now need to figure out where to park it.
Oh fun, my friend literally bought a $1500 car yesterday and it lasted 100 miles down the road before I had to rescue him. So I guess you're right, cars are cheap and I'm wrong.
That's mostly true. Around where I live, most people own cars and parking isn't an issue. That said, if you don't own a car/can't drive public transit is essentially non-existent with a small regional bus system that is pretty much the option of last result.
Uber's probably nice for the people who need to be transported to medical appointments and the like. On the other hand, there were other options including taxis/helpers of various types/family/etc. before Uber came along and the on-demand/convenient nature of Uber isn't as big a deal under those circumstances.
> It's luxury transportation for the upper middle-class on the back of disenfranchised metropolitan army of reserve labour.
People with more money tend to spend more. It's true for ridesharing but also plane tickets, car rentals, restaurants, grocery stores, hotels... All these businesses tend to be staffed with less wealthy employees to serve a wealthier clientele.
> In rural or suburban areas, cost and wait times will explode, if service is offered at all.
It'd think the economics would look more like a local, pre-Uber taxi service, but with 2-4x the volume because of improvements in ride hailing.
Interestingly, it could be worse because Uber drove the local taxi out of business, and the local taxi might have been a sole proprietor who can work for less than minimum wage.
I live in Boston exurbs and the once or twice I've needed a "taxi" I was able to get an Uber (from not a lot of choices during the day) but there weren't any Lyfts available. So, yes, ride-share can get pretty thin on the ground once you get out of cities.
In normal times, I don't even try to use them for airport trips; just book a private car.
> My prediction is that in the cities, things mostly won’t change.
The reason Arcade City is growing so fast is because they not only allow but encourage drivers to own their relationship with the riders, unlike Uber and Lyft where you get banned for going off platform. So the drivers all love it and they promote the platform like crazy to their riders, and also to other drivers in their WhatsApp groups. If anything I would think owning your own Rolodex would be more valuable in cities, given the higher density of high-value customers.
Can you clarify how this will change from the current situation ? Even now drivers in suburbs know they won’t get rides and often are there because they are starting the day, or they dropped off someone
Minimum wage isn't really that expensive. Suppose a driver makes $12/hour. That's $96 per day. If they do just 10 rides in 8 hours -- and they could do much more -- riders need to pay just $9.60 per ride. Sure, the rideshare company needs their cut, so add a 15% premium. It doesn't sound all that expensive. A 3 mile trip through town isn't going to become a $30 affair just because the driver makes minimum wage.
Add in about $0.50/mile for the cost of their car. (People can argue the exact numbers but that's about the number the IRS allows for deductions.) Which isn't a lot for a 3 mile ride but in spread-out areas, the ride is more likely to be 10 or 20 miles. Then double for round-trip.
Though, to the general point, a minimum wage driver is probably not as big a proportion of rental vehicle costs as many assume.
Incentives change. Right now there’s zero incentive for a driver to log in at remote location at weird hours - they go where and when the riders are. If you’re guaranteed a minimum pay just for making yourself available, all of a sudden logging yourself into a system at 2 am in a sleepy suburb is basically free money.
Doesn't seem to, but they pointed out that they were being conservative in saying that an employee that makes 10 rides in a day charging $9.60 per ride covers their salary. If they made 15 that would probably cover fuel, maintenance, depreciation, and their salary.
Of course this would be a company owned car and they'd be reimbursed for fuel and stuff so at least the company is the one taking that risk. But if they're real employees, firing ones that can't make fifteen rides happen in eight hours is just kind of the obvious result.
>Doesn't seem to, but they pointed out that they were being conservative in saying that an employee that makes 10 rides in a day charging $9.60 per ride covers their salary. If they made 15 that would probably cover fuel, maintenance, depreciation, and their salary.
I think its the opposite of conservative to ignore the greatest cost of being an uber driver - your car.
> My prediction is that in the cities, things mostly won’t change. In rural or suburban areas, cost and wait times will explode, if service is offered at all.
This, in a nutshell, is exactly the problem.
Uber and Lyft make almost all their money in areas where there is already a useful, functioning cab system.
Had Uber and Lyft positioned themselves as serving San Diego, Sacramento, Bakersfield, etc. people would have been falling all over themselves to defend them.
Instead, they focused on San Francisco and Los Angeles and "disrupted" the cab system which was already functioning because that's where all the profit was and they wanted "Unicorn scale".
Well, okay, you reap what you sow.
> Drivers don’t have good statistics on where to wait.
That's totally false. Drivers absolutely know. My street has a lot of brewpubs that close at 10:00PM on weekdays, and the Uber/Lyft drivers flood the area and cruise just ahead of that.
It's actually incredibly annoying if you live in the area because it creates a huge traffic spike on a relatively small road that is also a cycling route at a time that people are going home.
SF cab experience was terrible before uber/lyft. Calling a dispatcher was about as useful as yelling into the wind.
When a cab did pull up, they would crack their window with doors locked and ask where you were going. If the ride wasn't lucrative enough they would drive away. Many would take longer routes because it was 'faster' unless you spoke up. Good luck trying to pay with a credit card, and after paying with cash, they somehow never had proper change forcing you to either escalate the situation or just round up significantly.
The words “functional” and “San Francisco cab system” were never used in the same sentence during the heyday. You basically had to call 3-4 different companies in the hopes of one showing up.
Agreed, unless prefaced with the phrase "We don't have a".
When Uber came to Japan, they pushed heavily on their three main points:
- Uber is convenient.
- Uber is safe.
- Uber is clean.
Japanese taxis are (a) everywhere; (b) probably about the safest form of transport that doesn't have armor plating; and (c) are probably cleaner than the a Blue Cross operating theater.
A lot of Uber and Lyft proponents don’t really consider this. If both of them leave the market, the demand will still be there and will be served by other entrants that have more viable business models (including adherence to laws). This is exactly what happened in other markets where Uber and Lyft left for various reasons. Granted, the experience might be a bit worse for riders (Ex. waiting longer), but I’m 100% ok with that.
Posted it in an other thread [0] but do we really want to go back to the medallion system?
Pre-Uber, either the driver rented the car to a middleman who rented the medallion from a rich owner, or said owner was selling and financing (most banks won't touch these medallions!) a medallion at a ridiculous interest rate to a driver that planned to use it as his retirement savings (an extremely volatile asset and not very liquid).
The more I spoke to cab drivers the more it seemed their industry was a pyramid schemed aimed at helping established rent-seeker take advantage of often poor new immigrants. Uber brought a breeze of fresh air: Someone could simply buy a car, calculate the depreciation and it's value on the market (since unlike medallions cars are relatively liquid assets!) do rideshare and calculate their profits or loss. They can get out of the game at anytime, and they know exactly how much they are going to get for the car they have should they sell it.
Also, the argument on Uber/Lyft drivers not being contractors since they can't set their own rates and decide which ride they take strikes me as weird since medallion drivers were contractors, had to charge the price set by the city and could only pick-up customers in the (arbitrary) zones covered by their medallions.
> Posted it in an other thread [0] but do we really want to go back to the medallion system?
No, but that doesn't preclude us from stopping Uber and Lyft. We can have a different system where there are no medallions, the number of cars aren't artificially constrained, but the companies running them need to obey existing laws.
> the companies running them need to obey existing laws
Well let's not act like "existing laws" are the most important factor. The laws were changed here, after all!
I'd like to see a system where drivers have a lot of control over when they work, and can be in both apps at once, but also have healthcare and the ability to access unemployment insurance. Even though as far as I'm aware it's not feasible under existing law.
They weren’t, though! Uber and Lyft are being told that they should have been classifying drivers as employees all along because they’re treating them like employees. This has been plainly obvious from day one.
They were not legally required too; or at-least never lost a law suite to the degree that they were required too. Only once AB 5 pass did it really become a true legal requirement.
Well, TFA is about how Uber and Lyft are leaving California because AB5 makes them pay drivers minimum wage, so I would hope they are leaving California because of a real, existing threat.
> We can have a different system where there are no medallions, the number of cars aren't artificially constrained, but the companies running them need to obey existing laws.
The only reason why the laws changed at all was because of Uber and Lyft.
Nobody would have changed the system if they didn't come in.
> that doesn't preclude us from stopping Uber and Lyft.
I really really hope that you fail. Thanks to Uber, my wife can enjoy safe and reliable transportation. But some whiteknighting woke people cannot tolerate that, I guess they hate women? Oh wait, my wife is an evil capitalist who's exploiting poor User drivers, right? How ironic
It could be interesting to artificially constrain the number of cars and auction the slots on a rolling 12 Month basis so that the tax payers get the full value of the licenses rather than speculators
Also, if we're doing this, let's also artificially constrain something else, maybe the amount of meat produced, and auction the right to sell meat to few highest bidders? After all, meat production has a lot externalities like methane emissions, etc etc., so why not constrain it?
Then, we must prevent exploitation of poor underpaid workers in Bangladesh, so let's restrict clothes supply, to reduce harmful externalities. Two pairs of basic jeans and 3 shirts should be enough for everyone, right?
I agree with disrupting the medallion system but the cost of rides fell dramatically and by most accounts I can find if drivers actually did their taxes correctly, they would be making less than minimum wage[0]
Why keep driving if the wages are so low? Also, in the medallion days it wasn't uncommon for drivers to end up in the red after a bad day, when factoring the costs of renting the medallion in the first place.
Because drivers, generally speaking, are not well-informed of their costs. Generally speaking when considering their wages they don't count the costs of the maintenance and depreciation on their vehicles, because this is not something that a normal driver has to think about very hard, and they all used to be just normal drivers. But it's not very hard to hit 100k miles on a car when rideshare becomes your new profession.
> Because drivers, generally speaking, are not well-informed of their costs.
I dunno, going through some forum threads on UberPeople shows exact opposite - drivers meticulously track their take, expenses, etc. - there is even a cottage industry of tools giving them all sorts of data analytics in exchange for the ride data.
Anecdotally, I’ve seen one driver keep a spreadsheet of various gasoline brands and his mpg (my destination was near Costco and I casually suggested he use it to refuel, and got an earful on how Costco was in his top 5, but not the best options to refuel).
I'd assume active participants on an Uber driver's forum are going to be better informed than the average driver, but may not be representative. Maybe Uber relies on churning through less informed people to "fill the gaps" and provide service in less profitable (for drivers) locations or timeslots.
All I can think is that you saw "less informed" and read "idiot", but that's not what I wrote. Not everyone makes it a hobby to optimize their finances down to the last detail - in fact most people don't.
I'm probably leaving money on the table with my retirement savings - perhaps there are lower cost funds or tax-loss harvesting I could be doing if I spent hours each week reading personal finance blogs. That doesn't mean I'm an idiot, and it's the same with drivers who don't necessarily calculate wear and depreciation for every last mile.
So to save the “less informed” CA politicians passed a hideous, law written for the legislature by unions and ended up taking out a bunch of industries besides just Uber and Lyft.
My favorite group are all the liberal tech writers, the majority of which fell under AB5 and are now freaking out too.
Unintended consequences are often far more damaging than just letting markets sort things out.
And who says making less than minimum wage is always a bad thing? A lot of people drive for these services as supplemental income. It’s NOT their primary income, yet all your arguments are coming solely from that perspective.
I don't think most Uber/Lyft drivers look at this as a career; at least, none of the ones I've met do. It's a way of making a few bucks without a lot of commitment while they prepare to do something else.
You want to help these people out? Get rid of most occupational licensing.
The only reason the cost of rides fell dramatically is that Uber has been losing billions of dollars yearly[1]. Any other business would have folded and declared bankruptcy.
You are totally right. Medallion owners wouldn't try to lobby local governments to restrict the supply of medallions. Just like the AMA doesn't lobby at all to set an artificially low number of residency spots for aspiring doctors.
Then the medallion system needs to be improved. But the medallion system served a purpose of limiting the number of cars. Traffic in big cities has become much worse precisely because of Uber and Lyft. The cost of that to everybody is orders of magnitudes higher than the slightly higher cab fares people were paying.
I want to believe this is possible, but experience also says it's not worth it.
This happened in Austin, TX. When Uber and Lyft left Austin due to a driver fingerprint ordinance, RideAustin, a local non-profit with the backing of an Austin tech mogul, sprung up. Ride Austin paid drivers better, had a round-up option to support local charities, and though there were some early kinks with the app most of those went away after a couple months. I was a big fan and supported them as much as I could.
The second Uber and Lyft came back (state legislature overrode Austin's ordinance), Ride Austin's ridership plummeted. I tried to still take them whenever I could, but over time it became harder and harder (fewer riders meant fewer quality drivers). After 3 bad pickup experiences at the airport I said forget it. Covid was the final nail in the RideAustin coffin and it closed in June.
Of course California is a much bigger market so any competitors may have better luck, but I still think a lot will be wary if it's just a matter of time before the big boys come back in one form or another.
RideAustin did not work unless you had a US-registered credit card which cut off a huge group of people from being able to use it (not to mention they only published it in US app stores). I rented cars instead.
I highly doubt the international market would have made a lick of difference for a service only accessible in a city in the middle of Texas. Not saying there weren't some international visitors who may have used it, but in the grand scheme of things that's a drop in the bucket.
Ok then - not sure I agree during SXSW, ACL, the many downtown conventions etc, but fine, let’s go with that.
It was during SXSW 2017 that RideAustin failed for 5 hours one night, and the alternatives (Fasten etc) also did not work. How many qualified customers never even opened the app again after being burned by that?
I mean, if anything you are exactly making my point. RideAustin was a local nonprofit, run on essentially a shoestring budget, that failed during a surge that was probably many times the load they normally get in any single night, and your response is "How many qualified customers never even opened the app again after being burned by that?"
I'm not disagreeing with you, I'm just saying why would some small startup that really could only address a single, relatively small market (CA is big but pales in comparison to the world at large) be able to attract the capital necessary to eventually compete against Uber and Lyft? The service levels you've come to expect from Uber and Lyft don't come cheap, and they've already had years to scale their operations.
It's a weird dichotomy I sometimes see on HN: "Why aren't there more competitors in this space?" and "Why doesn't this other startup provide the same levels of service and low low prices as this other enterprise that got billions in VC funding?"
I feel like network effects are at play here. For locals, Ride Austin becomes the default. But for Austin, there's also many events that bring in regional and international travelers; it's not hard for them to find out who the local ride service is, download the app, and set up the service, but if Uber and Lyft are available, they're the lower friction option and are going to be the default choice of travelers, regardless of moral fringe benefits like paying drivers better or supporting charities.
Wouldn't something like Ride Austin also face the same problems as Uber, which is to say, they need to hire every driver as an employee which they do not at this time
I'm not actually sure. I lived in Austin during the time, and it was nice, but it also meant I needed to have 2-3 Austin-specific rideshare apps, Uber and Lyft, and then Juno for when I was in NYC. It was just cumbersome.
I wasn't using any of them regularly, mostly just on trips/to and from the airport, so a lot of the time when I tried to open any of them, they'd need me to re-enter my payment info. It's just not a good UX to have 5 different apps that all do the same thing, because you can't be sure exactly which ones will work when you need them.
What do you mean "compete fairly". I don't see how they competed unfairly when they came back. There is no way a small, single-locale-focused ride share company can provide the levels of service and quality people have come to expect from Uber and Lyft.
They mean Uber and Lyft use investor money to subsidize ride costs, so they are able to beat the local alternatives on price.
It’s the classic, big company opens a store in a small town and sells at a loss until the local mom and pops are driven out of business, then raises the prices once they are the last man standing.
This is trivial. Ban the new thing, and a variant of the old thing will re-emerge. This is akin to observing that if you ban Wikipedia, the market for print encyclopedias will grow.
That has no bearing on whether such a ban is a good idea.
To counter your example, I doubt people would go back to print encyclopedia once wikipedia were to be banned. Wikipedia has fundamentally changed the way one looks up reliable information online, with simple computer-enabled features such as searching, cross-referencing,fact-checking, etc. We would likely see people getting dumber (due to the lesser and scattered number of sources) or relying on less reliable internet sources for information. Or outright piracy, which is of zero utility to the publishers.
Ride sharing has fundamentally changed the way I travel in developing countries. It's much easier to rely on an app's set price rather than haggle with taxi drivers on offers far higher than Uber's. On the other hand, I have found less utility in developed countries where it's much easier (and cheaper in general) to rent/buy your own car, or rely on a cab meter. Likewise I don't really see people moving back to the old ways - on the contrary, a number of taxi companies and cities are already exploring/already begun app-based services.
Maybe a few years from now, we might see Star Alliance type industry groups within the taxi industry.
In the consumer space in particular it's the service that offers the best combination of service and price that's going to win out. I understand you are willing to have a lower quality service with higher prices, but the market likely says otherwise.
It's also not something I'd want to start a business on. Even assuming you think you can make the economics of it work out under the new regulation, you're gambling that CA doesn't change the law again later - either rolling back this restriction, or adding some new one because they decide that you too are being abusive. I'm not sure I'd want to invest in any company trying to get into this niche.
I don't think we can actually say what "the market" says since the market hasn't seen what a long-term cost basis and experience is for ridesharing that's both profitable and adheres to local regulations. Of course people want artificially cheap things, but that's not really a good start for determining what the market is actually willing to bear.
Well, they did get more alternatives, but a worse UX and more fragmented driver base that was smaller due to the added regulation meant that I just ended up driving more places myself. It became too expensive to take to go out drinking, so I just didn't go out as often. It became cheaper to park at the airport, and I didn't have to schedule a ride hours ahead, so I started doing that instead,
It turns out price/availability is pretty important, and adding regulation that hurts both often makes it hard to run the business at all.
It's like if a city demanded that all restaurants only served organic foods. It might be better in the abstract, but it's likely going to put a lot of places out of business and raise the costs of what's left over. Maybe that's ok, but it's not without cost.
I mean you could say this about any regulation and any sector. I'm sure a lot of businesses went out when we banned child labor, introduced weekends, the 40-hour week, etc.
We've always set a bar for a minimum societal contribution that companies need to be making. There's no indication that the current bar is anywhere close to perfect.
Sure, and this is a balance that happens in every sector. I'm just pointing out that there's obviously a balancing act between what you can demand from companies in regulation, and what will push them far enough to make them nonviable.
Increasing cost doesn't necessarily mean that people will choose to pay it, or that it won't cause uncomfortable disruptions to lifestyle/planning. On the other side, there's plenty of services we want to exist that we regulate, but also subsidize because we think the value of them existing is high enough even if they're not financially viable at the cost we'd need them to be at.
Given that the US performs middling to poorly on most statistics of welfare and simultaneously has the longest working hours in the OECD I think it's safe to say we could set the bar higher.
Given that per-capita GDP is higher in US than in most those countries (actually all of them except oil-propelled Norway), you can argue that the bar could be even lower
No they are not. Uber deliberately plays games with Non-GAAP reporting ("look how profitable we are if you ignore pesky things like interest, depreciation, and stock compensation") and shuffles losses away from Rides (to Tech) to show a net profit when there is none. Any standard accounting look at their balance sheet shows them losing money.
Uber and Lyft aren’t unprofitable at the margins in developed markets. They instead spend money expanding.
Back in 2016 Uber says it was profitable in places like California. Why would VC spend billions to permanently give free rides to Californians? It just doesn’t make any sense.
I looked. The articles aren’t actually saying that the rides have a negative profit. Only that margins are low (which is quite plausible)
The article is consistent with both of our beliefs, i.e. it’s vague as to whether losses are intrinsic to rides, or whether margins are low + there are expansion costs.
It may have started that way but not anymore. You can viably replace car ownership with ride-share and spend _less_ money each month than being a car owner. Many people do this, it not just luxury.
I think that is only viable in places where car ownership is prohibitively expensive already. A short trip is easily $10, and then you still have to get back. Do that every day and you’re spending ~$600/month. If you live in an area that isn’t parking constrained (most of America!) owning a car can be much more affordable than that.
Uber and Lyft both have commuter arrangements that cost more on the order of $2.50-3.50 a trip. Mainly focused on the GGP claim that these services are strictly luxury.
We had that before with taxis. It wasn't good. Dirty cars, long wait times (if they come at all), "broken" credit card machines.
Granted for the most part that was with medallions, and maybe with more open competition things will be better. But with employees only I don't see how you can get the elasticity of supply.
Keep in mind Uber operates in almost a thousand cities worldwide. Of course certain places will earn Uber more than others, but it’s not a huge hit to their revenue.
The real threat, as I see it, is other states enacting similar laws that will have a domino effect.
Uber does operate in many cities, but its revenue is disproportionately concentrated in California:
> “In 2018, we derived 24% of our Ridesharing Gross Bookings from five metropolitan areas — Los Angeles, New York City, and the San Francisco Bay Area in the United States; London in the United Kingdom; and São Paulo in Brazil,” Uber writes in the S-1. “An economic downturn, increased competition, or regulatory obstacles in any of these key metropolitan areas would adversely affect our business, financial condition, and operating results to a much greater degree than would the occurrence of such events in other areas.”
It is a huge hit to their revenue. It is not total catastrophe or anything, but as other people pointed out it is significant enough for this to be not as flippant as turning off some other smaller state or country.
I'm a bit peeved as a Californian that they had a year to change their model either to onboard their drivers as employees or make them valid contract workers within the law, and chose to screw over their drivers and customers instead.
I can't say that the law makes their business untenable because the law hasn't been tested yet.
If and when the law shows that these new taxi services can't operate as efficiently before for drivers and consumers then I'll put the blame on the government, not the businesses throwing a tantrum over being regulated.
I really don't have sympathy for these organizations that have made antagonism a core value.
When California adds a new regulation, businesses often adapt by charging an extra fee. Restaurants in SF did this when the health insurance mandate was initiated. Uber and Lyft could charge a $0.50/ride fee (or whatever the number is), but it seems they don't want to.
I recently requested a Lyft “wait and save” and had to suffer through 3 cancellations (I was going to the airport). I think there are definitely cracks in the “independent contractor” model if Lyft can quote me a definite timeline (15 min wait), have 3 drivers cancel on me because the fare was too low.
Same, tried to get both either an uber or lyft in an upscale mountain town recently. Their algorithms seem completely unable to cope with rural areas, especially in these covid times.
Zero drivers. No drivers to even reject the horribly underpriced fair for our 4 mile trip. Both uber and lyft assumed the driver would be already near our location, not 4 miles away.
Lyft and uber started quoting the ride as as about $9. Lyft never changed it. Uber did actually up the price to $20something after it failed to find drivers.
Local taxi company charged us $60 bucks. $30 + tip would have been what I'd think as reasonable starting for lyft or uber. That's 3x what either of showed.
I’m sure the institution that brought us the Los Angeles public school system and the thriving Los Angeles public transit system will surely succeed in building an Uber competitor.
I have a feeling that the lack of faith that Americans have in their government ends up being a self-fulfilling prophecy. I work closely with a lot of government employees, and it really seems like 95% of the work is about avoiding "boondoggles" -- i.e. highly visible failures. This is because boondoggles can be used as political tools, and ultimately, politicians are more concerned about getting reelected than getting anything done. The upshot of this, is that they would rather risk low visibility failures way more than high visibility failures. As an example, about 10 years ago, they were looking to install wifi in one of the buildings that I work in so they bought a bunch of routers. One of the higher ups wanted to assure that this wouldn't cause any security issues so they ordered audit after audit after audit. Eventually they just stopped trying and the building still doesn't have wifi, and they wasted all the money on those routers and audits. The problem is that they don't even have any sensitive data or data to be secured on that network. It's like this for everything. I think a better system would be to tolerate some very visible failures vs basically guaranteed non-visible failures.
Federal receipts as a percentage of GDP have been basically the same since WWII. (Before that they were significantly less.) One of the reasons for this is that we started spending around the "maximum size of government" level during WWII for obvious reasons, i.e. the point past which raising taxes doesn't increase government revenues because they're offset by shrinking the economy, and never receded from there because there was never anyone who could cause it to stop and had the incentive to. What changes is really only who gets the money.
So all the spending is effectively zero sum. The real tax rate never really goes up or down very much, so if you want to do something, you have to find something else to not do.
All of the incentives then fall directly out of that. If you're getting money and nobody is paying attention to you then the most important thing is to have them continue to not pay attention to you so that you can keep getting the money. Meanwhile, if you want to get money for something, find someone else to make look bad so you can justify taking it from them.
Obviously this doesn't produce good results, but the problem is structural. The populist reforms made in the first half of the 20th century deleted all of the checks and balances on federal spending (compare how much of the budget of EU countries is the EU itself), which requires government programs to compete based on political power rather than merit because you can't just say that a program is worth the money, you have to find something else to displace whose advocates are weak enough to defeat because the trough is already full. Which has little to do with whether your program is better than theirs.
Imagine if we spent half as much money but the reduction came out of the likes of ludicrous military boondoggles and de facto subsidies for pharma companies.
Sounds like how I start projects. Try and figure out every last detail, get hung up on doing all this preparation, learning, etc and eventually give up because I’m tired of the process or things aren’t turning out as perfect as I’d like them.
Recently I’ve been trying to follow the ‘move fast and break things’ mentality, albeit more of a ‘just try moving a bit and things breaking is ok’ mentality.
I am not saying LA public transit will ever be able to produce something like Uber, but the way they grew public transit in the last 10 years is way more complex than an app based business funded by unlimited VC capital. This includes building transit lines connecting a city of 400 sq miles and has a ton of hilly terrain with the worst traffic congestion and always constrained by tax dollars
How is that different from saying saying "I'm sure the programmer who brought us StumbleUpon and the venture capitalists who invested in WeWork will surely succeed in building a public transit competitor"?
> because unlike government, if they fail, they will be replaced quickly
Governments that actually fail tend to be replaced quite swiftly. Businesses can fail without being replaced (not filling an actual need is a common reason businesses fail.)
Sure, albeit in some concrete context where the processes, structures, and effects of transportation and education can be adequately compared in order to interpret the valuing to begin with.
The above commenter was clearly not interested in having a discussion about what they value in order to see this evident superiority, though, so I didn't see any point in pressing the conversation further.
If cities do it collectively, OK, best of luck finding the talent and funding to build it, but OK. What I really don't want are substandard balkanized ride hailing services. I have the same gripe with mass transit--I need a separate card for different systems, sometimes in the same city.
Woah! Thanks for this! I had no idea this was a thing. Definitely going to check this out. Sounds way more ethical than Uber or Lyft. I'll be interested to see what the experience is like (wait times, cleanliness, driving reasonably, etc.).
I hope drivers end up being forced to be employees with a set schedule. It would hopefully weed out all of the REALLY bad drivers both platforms have that I even wonder how they have licenses.
Does this men taxi medallions are good investments again. Sometime back there were articles about how the medallions market had completely crashed due to Uber and Lyft.
This is the usual with these 'compassionate' government ideas. If you can't compete with a company, lobby the government to force your competition out of business, while calling it a kindness to the public.
> "Last week, top executives at Uber and Lyft said that, if forced to comply with the ruling, they’d likely have to suspend service in the state while reworking their businesses around the law."
>"[The law] once passed, Uber and Lyft claimed it shouldn’t apply to them, prompting California’s attorney general and three city attorneys to sue the firms for misclassifying workers."
So instead of taking the time to prepare to meet the new requirements of a law that to some extent was directly aimed at them, the current ride-sharing incumbents decided to play legal chicken and not prepare re-tooling for the change.
>So instead of taking the time to prepare to meet the new requirements of a law that to some extent was directly aimed at them, the current ride-sharing incumbents decided to play legal chicken and not prepare re-tooling for the change.
That's not true. They've implemented changes in CA to give drivers more power to set their prices and choose their customers. Also have given more power to customers to choose their preferred drivers.
Really? How can I choose a driver on Lyft? I've never seen this functionality offered before (but I admit I don't use these services too often). I'd love to be able to choose a driver I know and trust. That sounds really cool!
I don't know if Lyft has it but Uber does. After the ride, you get an option to "like" the driver. Surprisingly, Uber has made a lot more driver friendly changes than Lyft recently.
That sounds more like putting lipstick on a pig. It's trying to inch towards the idea that these are legitimate business transactions rather than an essentially comoditiesed transactions.
If the gas station claimed their pump attendants were self employed then it would be equally dubious. They have no really ability to differentiate themselves in the market place, availability trumps all else and the station sets the pricing.
Competitor uses 'Compliance'. It's super effective.
They do not want to comply. They want to 'strike' until the populace demands that they are allowed to operate again. I wish the competitors good luck in capturing as much market share as possible before Lyft and Uber notice that it might not work out.
Uber and Lyft’s sole “innovation” is in driving down the value of driving by reclassifying drivers as contractors and not having to pay benefits while the drivers barely earn more than they spend to keep working, so I don’t think they’re going to give in easily. It’s a shame the initial investors already got away with IPOs and foisting the consequences off onto general investors before the underlying business models collapse.
> Uber and Lyft’s sole “innovation” is in driving down the value of driving by reclassifying drivers as contractors and not having to pay benefits
This is supremely untrue: a huge part of Uber and Lyft's value proposition is not cost related at all. (Also, cab drivers generally aren't employees most places.)
They are more faster in most places. Other than some urban cores and transit hubs, it is much faster to get a pickup by Uber/Lyft than it ever was a taxi.
They are more reliable in most places. When you call a taxi, it may or may not show up, and you won't be told whether they're going to no-show after you call them.
They are more convenient. Ordering an Uber/Lyft is really easy. Most places, if you want to call a taxi, you have to use the telephone or use an inferior smartphone app. When they started growing, it was almost always the former.
They are a more pleasant experience. My worst experience in an Uber/Lyft ride is day-to-day in a taxi. I've had truly terrifying experiences with taxis.
Many of these factors are actually irrelevant to their labor practices. Some of them do relate (for instance, drivers are very vulnerable to rider low-ratings, in part since firing them is easier than firing employees), to be sure.
* You can predict when it will show. In a lot of cities you had to call a cab 10-15 min in advance
* You don’t need to pay. This says 2-3 min at the end
* It’s all above board. This varies by location but taxis always wanted cash, to hide earnings, and they would create incredible fuss over giving receipts for business expenses
* Not only is it above board, it’s automatic: business receipts from uber go straight to my accountant. Expensing is much easier.
In Europe traditional taxi companies caught up pretty quickly, you can now order taxi ride via app that has UX similar or even nicer than Uber, and you get licensed taxi driver, car with taxi signs, so that you no longer need to stare weirdly at all black Priuses approaching you, and the driver can speak your language, and knows his way around the city. To recap: traditional taxi service is of much better quality than Uber, and only slightly more expensive, therefore much preferred.
The only time I used Uber was in the US, once I came back I don't miss it at all. I don't know what exactly is wrong with US taxi market, but Uber and Lyft aren't the only solution.
This ought not be downvoted. If this is correct, the UX of those taxi apps handles everything I mentioned in my parallel comment.
I’m in Canada, and taxi UX really hasn’t caught up to Uber. But when I was in Brazil there was a taxi app that was basically equivalent to Uber. Except maybe you paid in cash. It’s possible for the taxi industry to improve parts of their model. The north american taxi system may lack the incentives?
Cab companies had long been classifying drivers like that. Also, the bidding process for cab rental generally drove net wages to the bare minimum, so Uber/Lyft weren't new in either respect.
When Uber first started destroying the cab business there were numerous interviews of NYC cab drivers talking about how far in debt they were to buy the medallion that enables them to work in the city.
That left me with the impression that cabbies rented the money to buy access to the market, and were paid enough to afford it.
It degenerated to medallions being expensive enough that cabbies had to work extremely long hours to make the payments on them. Wasn't uncommon to have two cabbies, one for the night and one for the day, drive the same car just to break even.
That and the financing for medallion often came from the seller. Not a lot of banks would touch these assets so the interest rates were horrendous on these.
And the price at which they lease means that the car has to run pretty much 24h a day. Often with drivers splitting shifts. All that to make below minimal wages and no benefits.
Walmart is the canonical recent example. They're just stores, and lots of people have stores, but Sam Walton's specific business model allowed his stores to sell a wider variety of goods at lower prices than any of his competitors' stores could.
What business model are you referring to? As far as I can tell they reduced prices mostly by (1) keeping wages as low as possible, and (2) by using their gatekeeper position to put their suppliers under pressure. I wouldn't call this an innovation. Also they improved their logistics, but I wouldn't consider this part of a business model.
Low-cost supplier is absolutely a classic business model.
If you want another one in retail compare and contrast with Costco. Which limits its number of SKUs (and actually has a reputation for paying workers relatively well by retail standards).
There was a study which suggest this is the case about 30% of the time[1], though they have also been criticized by Uber and others as under-counting the amount of money gained from ridesharing[2].
I think it's fair to critique the ridesharing companies for using a business model that requires their workers to do far more complicated calculations than most workers in order to ensure that they are working in a financially beneficial way.
Found this [1] in the Twitter thread linked in the Vox article. MIT revised upward their estimation of taxi-app drivers' income significantly after taking into account some criticism of their methods:
With minimum wage enforced, waiting in areas where drivers don’t make minimum wage on average will vanish since scheduled services are risk adverse and have lots of information. Before drivers might service those areas hoping to get a ride taking them to urban areas. Drivers don’t have good statistics on where to wait. Coordinated services do.