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The title of this post is a line from one of the works of Jenny Holzer. It feels appropriate right now.
On Wednesday, Toronto saw a large scale anti-Uber protest involving as many as 2,000 taxis. It involved a bunch of taxis driving real slow around downtown, some altercations, and lots of people who want to see Uber completely shut down.
This, of course, isn’t a new thing for cities.
Many cities around the world have seen similar kinds of protests. But many of you will probably also agree that this is not the most effective response from the taxi industry. It casts a negative light on them at a time when people are already switching to Uber for better service. It also ignores the fact that – in my view – Uber ain’t going anywhere.
I’ve been a vocal supporter of Uber on this blog and I continue to believe that it will continue to prove to be a good thing for both consumers and for cities. In fact, famed startup investor Paul Graham once tweeted that because Uber is so clearly a good thing, you can tell how corrupt a city is by how hard it fights against it. This has become the truism among today’s urbanites.
At the same time though, I am trying to take a balanced view on this issue, which is what got me thinking about the work of Jenny Holzer. Protect me from what I want. Today, I want Uber. But I am trying to think of where that want might lead me.
Like a lot of private companies, the goal of Uber is monopoly profits. They would love to control the market. And that’s not a knock against them. It is just business. But I am imagining a market where only Uber exists.
When I was in Miami last week I switched back and forth between UberX and regular taxis. Because Art Basel was going on, Uber was frequently in surge pricing. Sometimes as high as 4x. So in those cases, I just hailed a regular cab. Thankfully the cabs there are pretty reasonably priced and easily to hail. The driver didn’t ask me if I liked the electronic music playing on the satellite radio, but that’s not a big deal.
But what if I didn’t have the option of hailing a regular cab? What if Uber was my only option and I had to put up or shut up when prices were 4x? That would be suboptimal in my books.
So what does this all mean?
I am an Uber customer. I do not want and I do not believe it will go away. But I also believe that our public policy should encourage competition in the taxi marketplace. Competition holds people and companies accountable. It means that if you stop creating value, you will go out of business.
It’s for that reason that I think the taxi lobby is wrong in trying to force Uber to shut down. And it’s for that reason that cities are going to have to work very hard at crafting the right kind of public policy. I am optimistic that Toronto will make that happen. But as we’ve seen today, there will be bumps along the way.
Holding Pattern by Sean Arbuthnot on 500px
This afternoon I saw on Twitter that Toronto Police are now starting to crackdown on UberX drivers in the city. The investigation is called “Project Snowball” and they have already charged at least 11 people. The fines are anywhere from $200 to $20,000.
My response on Twitter was the following:
https://twitter.com/donnelly_b/status/582978841083248640
I get that Uber is a highly disruptive company. I’ve written about it many times before. But at the end of the day, this is not just about Uber. This is about a larger shift in the economy.
The buzz term is “sharing economy.” But one of the ways I like to think about it is like so: Facebook doesn’t produce any of its own content, and yet you could define it as a media company. Airbnb doesn’t own any rooms, and yet it is disrupting hotels. Uber doesn’t own any cars or plates, and yet it is disrupting the taxi industry.
What’s happening is that the internet and mobile phones are allowing for peer-to-peer connectivity and more decentralized forms of marketplace supply.
What does that mean?
It means that instead of having a fleet of cars or a centralized hotel building, anyone with an extra car or an extra room (and an internet connection) can plug themselves into the market. And that represents an entirely different cost structure for businesses.
It’s worth noting that prior to Uber, Travis Kalanick founded a peer-to-peer music sharing company called Scour (1998). Its closest equivalent would have been Napster. Remember Napster? This is not a new trend.
That said, I still think we’re at the early stages of this shift. I predict that many other industries will see disruptors similar to Airbnb and Uber. And so when I look at it in this context, I have a hard time believing that fining UberX drivers is the most enlightened way forward.
I believe we should instead be taking a leadership position and trying to figure out how to adapt our rules and regulations to this changing economy. Toronto is not alone in this battle. But we could certainly be the one to lead the way out.
A few days ago, Bill Gurley – who is an investor in Uber – wrote a really fascinating blog post called, Uber’s New BHAG (Big Hairy Audacious Goal): UberPool. Bill doesn’t update his blog very often, but when he does it’s incredible stuff.
I’ve touched on UberPool briefly before. But basically it’s a true “ride sharing” service where people with overlapping routes can easily share the same car – much like people do today informally. The obvious advantage of this is cost. It’s cheaper to share.
What’s most fascinating about this service though is how it fits into Uber’s larger mission to drive transportation costs down. And there’s a specific reason for that (via Bill Gurley):
When Uber launched its low-cost UberX offering in the summer of 2012, the company quickly realized that the demand for its transportation services is HIGHLY elastic. As the company achieved lower and lower per-ride price points, the demand for rides increased dramatically. A lower price point delivered a much better value proposition to the consumer, yet still remained a great business decision due to the remarkable increase in demand.
So what Uber quickly figured out was that if they could increase the utilization rate for drivers (the time actually spent with passengers), they could charge consumers lower prices while at the same time maintaining driver salaries. Prices went down, but volume went up.
One way to do that is to obviously decrease driver downtime by improving liquidity on the marketplace. But another way is to simply increase the number of passengers being transported at one time. Hence the creation of UberPool.
But it doesn’t stop there.
Because of all the transportation data that Uber now has (the company has a data group called the “math department”), they can fairly accurately predict what a price cut will do to their ridership levels. This allows them to “forward invest” their capital in new services – such as UberPool – before they even have the revenue from the anticipated increase in ridership.
So what does this all mean?
It means that Uber is going to get cheaper and cheaper and cheaper. Uber is trying to get to what they call “The Perpetual Ride”, which basically means that drivers will always have customers (100% utilization). That’s quite a goal, but it would mean the absolute lowest prices for consumers (barring any other changes to their cost structure).
Dirt cheap transportation is a pretty compelling value proposition, which is why I continue to believe that cities should be hard at work trying to figure out how to harness this transportation shift.
If you’re interested in this topic, I would encourage you to give Bill Gurley’s blog post a read.
The title of this post is a line from one of the works of Jenny Holzer. It feels appropriate right now.
On Wednesday, Toronto saw a large scale anti-Uber protest involving as many as 2,000 taxis. It involved a bunch of taxis driving real slow around downtown, some altercations, and lots of people who want to see Uber completely shut down.
This, of course, isn’t a new thing for cities.
Many cities around the world have seen similar kinds of protests. But many of you will probably also agree that this is not the most effective response from the taxi industry. It casts a negative light on them at a time when people are already switching to Uber for better service. It also ignores the fact that – in my view – Uber ain’t going anywhere.
I’ve been a vocal supporter of Uber on this blog and I continue to believe that it will continue to prove to be a good thing for both consumers and for cities. In fact, famed startup investor Paul Graham once tweeted that because Uber is so clearly a good thing, you can tell how corrupt a city is by how hard it fights against it. This has become the truism among today’s urbanites.
At the same time though, I am trying to take a balanced view on this issue, which is what got me thinking about the work of Jenny Holzer. Protect me from what I want. Today, I want Uber. But I am trying to think of where that want might lead me.
Like a lot of private companies, the goal of Uber is monopoly profits. They would love to control the market. And that’s not a knock against them. It is just business. But I am imagining a market where only Uber exists.
When I was in Miami last week I switched back and forth between UberX and regular taxis. Because Art Basel was going on, Uber was frequently in surge pricing. Sometimes as high as 4x. So in those cases, I just hailed a regular cab. Thankfully the cabs there are pretty reasonably priced and easily to hail. The driver didn’t ask me if I liked the electronic music playing on the satellite radio, but that’s not a big deal.
But what if I didn’t have the option of hailing a regular cab? What if Uber was my only option and I had to put up or shut up when prices were 4x? That would be suboptimal in my books.
So what does this all mean?
I am an Uber customer. I do not want and I do not believe it will go away. But I also believe that our public policy should encourage competition in the taxi marketplace. Competition holds people and companies accountable. It means that if you stop creating value, you will go out of business.
It’s for that reason that I think the taxi lobby is wrong in trying to force Uber to shut down. And it’s for that reason that cities are going to have to work very hard at crafting the right kind of public policy. I am optimistic that Toronto will make that happen. But as we’ve seen today, there will be bumps along the way.
Holding Pattern by Sean Arbuthnot on 500px
This afternoon I saw on Twitter that Toronto Police are now starting to crackdown on UberX drivers in the city. The investigation is called “Project Snowball” and they have already charged at least 11 people. The fines are anywhere from $200 to $20,000.
My response on Twitter was the following:
https://twitter.com/donnelly_b/status/582978841083248640
I get that Uber is a highly disruptive company. I’ve written about it many times before. But at the end of the day, this is not just about Uber. This is about a larger shift in the economy.
The buzz term is “sharing economy.” But one of the ways I like to think about it is like so: Facebook doesn’t produce any of its own content, and yet you could define it as a media company. Airbnb doesn’t own any rooms, and yet it is disrupting hotels. Uber doesn’t own any cars or plates, and yet it is disrupting the taxi industry.
What’s happening is that the internet and mobile phones are allowing for peer-to-peer connectivity and more decentralized forms of marketplace supply.
What does that mean?
It means that instead of having a fleet of cars or a centralized hotel building, anyone with an extra car or an extra room (and an internet connection) can plug themselves into the market. And that represents an entirely different cost structure for businesses.
It’s worth noting that prior to Uber, Travis Kalanick founded a peer-to-peer music sharing company called Scour (1998). Its closest equivalent would have been Napster. Remember Napster? This is not a new trend.
That said, I still think we’re at the early stages of this shift. I predict that many other industries will see disruptors similar to Airbnb and Uber. And so when I look at it in this context, I have a hard time believing that fining UberX drivers is the most enlightened way forward.
I believe we should instead be taking a leadership position and trying to figure out how to adapt our rules and regulations to this changing economy. Toronto is not alone in this battle. But we could certainly be the one to lead the way out.
A few days ago, Bill Gurley – who is an investor in Uber – wrote a really fascinating blog post called, Uber’s New BHAG (Big Hairy Audacious Goal): UberPool. Bill doesn’t update his blog very often, but when he does it’s incredible stuff.
I’ve touched on UberPool briefly before. But basically it’s a true “ride sharing” service where people with overlapping routes can easily share the same car – much like people do today informally. The obvious advantage of this is cost. It’s cheaper to share.
What’s most fascinating about this service though is how it fits into Uber’s larger mission to drive transportation costs down. And there’s a specific reason for that (via Bill Gurley):
When Uber launched its low-cost UberX offering in the summer of 2012, the company quickly realized that the demand for its transportation services is HIGHLY elastic. As the company achieved lower and lower per-ride price points, the demand for rides increased dramatically. A lower price point delivered a much better value proposition to the consumer, yet still remained a great business decision due to the remarkable increase in demand.
So what Uber quickly figured out was that if they could increase the utilization rate for drivers (the time actually spent with passengers), they could charge consumers lower prices while at the same time maintaining driver salaries. Prices went down, but volume went up.
One way to do that is to obviously decrease driver downtime by improving liquidity on the marketplace. But another way is to simply increase the number of passengers being transported at one time. Hence the creation of UberPool.
But it doesn’t stop there.
Because of all the transportation data that Uber now has (the company has a data group called the “math department”), they can fairly accurately predict what a price cut will do to their ridership levels. This allows them to “forward invest” their capital in new services – such as UberPool – before they even have the revenue from the anticipated increase in ridership.
So what does this all mean?
It means that Uber is going to get cheaper and cheaper and cheaper. Uber is trying to get to what they call “The Perpetual Ride”, which basically means that drivers will always have customers (100% utilization). That’s quite a goal, but it would mean the absolute lowest prices for consumers (barring any other changes to their cost structure).
Dirt cheap transportation is a pretty compelling value proposition, which is why I continue to believe that cities should be hard at work trying to figure out how to harness this transportation shift.
If you’re interested in this topic, I would encourage you to give Bill Gurley’s blog post a read.
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