Tag: hailo

• Should Uber be shut down?

  

  Last week Travis Kalanick – the cofounder who built Uber into the most highly valued privately held startup in the world – stepped down as chief executive at the request of his investors. This was the culmination of months of controversy related to the company’s toxic corporate culture.

  So what’s next? 

  Benjamin Edelman, associate professor at Harvard Business School, recently argued that this is it for the company: Uber Can’t be Fixed – It’s Time for Regulators to Shut It Down. I discovered the article through a good friend of mine who has felt similarly since the beginning. Uber’s business model is predicated on illegality and that should not be misconstrued as “innovation”.

  I have a few thoughts on this.

  But let me start by saying that this post is not a comment on the company’s corporate culture or its internal practices related to lobbying governments. I have not really been following what’s going on internally and I’ll leave other, more informed, people to comment on those matters.

  With that said, here are 3 thoughts.

  One, shutting down the company feels like an extreme case of throwing out the baby with the bathwater. Lots of companies go through restructuring, assuming that’s needed, without completely capitulating.

  Two, before Uber came along it was still challenging to pay for a taxi in Toronto with a credit card. More often than not the driver would tell you that the machine was broken or ask that you instead pay with cash. At that point, I would have accepted a clunky payment machine mounted to the rear of the front seats as an innovation.

  To say that Uber’s technological innovations were all banal things that its competitors were already about to introduce is downplaying so much of what the company has done outside of its beneficial cost structure. 

  We got perfect information: Where is my car right now? We got full pricing transparency before even accepting a ride: Should I take an Uber or transit or should I drive? We got the ability to get in and out of a taxi without pulling out our wallets: I’ll quickly jump out at this red light. We got dynamic ride pooling and cost sharing: Let’s split this ride 3 ways to bring the fare down. And we got clean cars that didn’t smell.

  Why weren’t any of the incumbent taxi companies do this?

  Three, I fully agree that Uber (unfairly?) benefited from a meaningful cost advantage by operating in the unregulated side of the market. This was a huge boon for the company because, as the data suggests, the demand for taxis is highly elastic.

  But I also believe that the incumbent taxi companies were perpetuating a marketplace that was anything but free enterprise. It ensured that the status quo was maintained and that those who historically benefited from the system continued to benefit from the system.

  Because of this, I’m not sure that we would have seen the innovation that we saw without a company like Uber deciding to operate within a gray area and not ask for permission. Protectionism may have stomped it out. This may be why Hailo – which operated in the regulated side of the taxi marketplace here in Toronto – ultimately wasn’t able to survive.

  Though I suppose you could argue that Hailo’s failure (at least here in Toronto) strengthens the argument that Uber was only able to thrive because of its illegal cost structure. 

  However, it’s important to remember that Uber got its start by actually charging more than traditional taxis. At the outset it didn’t have enough liquidity in its marketplace to compete based on speed and/or price, and so it decided to offer a premium experience. 

  UberX didn’t introduce steep discounts until later on and even today many people will gladly accept surge pricing at multiples of a regular taxi fare. Clearly customers are deriving some other benefits from the app.

  Edelman ends his piece by referencing Napster as an example of another startup that defied legality and was ultimately forced to shut down. Again, shutting Uber down seems extreme to me, but I do agree with his conclusion. Regardless of what happens, the lawful innovations that Uber introduced are here to stay.

  Photo by Carl Joseph on Unsplash

  2017.06.25

• Toronto seeks injunction to stop Uber

  

  One evening this past spring I was leaving a Rotman School event at Liberty Grand on the west side of Toronto. There aren’t a lot of taxis coming through this part of the city, so I figured I was going to have to wait while I hailed one from my phone. But as luck would have it, one happened to be pulling up just as I walked out of the hall.

  As he drove up and rolled down the window, I told him that I was going to the St. Lawrence Market area and that I needed to pay by credit card (I was trying to be a nice guy and avoid the inevitable fight when he was dropping me off). He responded by saying, “My machine is broken. Can’t you pay with cash?” I told him, “No, unfortunately I don’t have any cash on me. I need to pay with credit card.” He then rolled up his window and drove up closer to the entrance of the hall.

  Faced with this scenario, I did what most people would probably do nowadays: I pulled out my phone so that I could hail either an Uber or a Hailo cab (I’m sad that Hailo has since left the North American market). I decided on Hailo (it was cheaper until UberX came along) and ordered a car.

  But within a few minutes, the same taxi with the broken credit card machine circled back around, rolled down his window, and told me that his machine was now working and he would take me to the St. Lawrence Market. Knowing exactly what had happened, I said to him, “Wooooow, that’s funny that within the span of a few minutes your machine has magically started working again.” He wasn’t happy with that response.

  Now, we all know why he didn’t want to take my credit card. He didn’t want to pay the fees and he wanted the cold hard cash. And who can really blame him for wanting to maximize his profits. But for the end user, this experience sucks. When it’s 2 in the morning and all you want to do is go home to bed, you don’t care about the few dollars he’s trying to save. You just, want, to go, home.

  And that’s one of the reasons why Uber (and previously Hailo) is having such a huge impact on the market. Even before UberX arrived (the cheaper alternative), lots of people were more than willing to pay the Uber premium. And they continue to pay their controversial surge prices. But that’s because the experience is so much better than what’s offered today.

  We all know that Uber is under a lot of fire for what they do, but Toronto mayor Tory is 100% right in saying that ridesharing and peer-to-peer taxis are here to stay. Toronto may be seeking a court injunction to stop the service in this city, but I would agree that it’s likely going to be a big waste of money. The cat is already out of the bag.

  What’s happening here is no dissimilar to what happened with Napster. A court order may have forced the company to shut down, but it didn’t maintain the status quo for the music industry. That industry went, and continues to go through, a lot of change. So a better option, would be for everyone to sit down together and figure out what the future of the taxi industry is going to look like. Because I can guarantee you that it’ll continue to change.

  Image: Anti-Uber protest in London (Flickr)

  2014.11.20

• Multi-modal cities are the new reality

  

  CityLab published an article last week on multi-modal cities that caught my attention (because it used a picture of Toronto with about 3 or 4 streetcars stacked up along Queen Street). The premise of the article is that all of this car vs. transit debate is actually missing the bigger picture: our cities are multi-modal and we need to be planning for that.

  That’s not to say that the shift away from cars isn’t a good thing. It is. But it’s not as simple as saying that, instead of driving, people should now only take transit. In today’s cities people walk, bike, take streetcars, take buses, take subways, take taxis, take private shuttles, use Uber, and, yes, they still drive.

  From my own experience, this is absolutely how I get around Toronto today. I walk to the gym. I ride my bike whenever I’m going somewhere downtown. I take the subway to my office in midtown because it’s far and I would be too sweaty if I biked there. I use Uber and Hailo when I’m going out at night. And I drive when I need to go to the suburbs or leave the city.

  But the key takeaway here is that we now have a much tougher challenge on our hands. When we were only optimizing for cars – however detrimental to our cities that was – we only had one mode to plan for. Now we have several. Some of which are public and some of which are private.

  However we also have access to technologies that we didn’t have before. We are networked in ways that weren’t possible before and we’re at the dawn of many profound mobility changes, such as driverless cars. (Have you read about Tesla’s new Autopilot feature yet?)

  So as I’ve said before, I really believe that we need to look at this, not as a war on the car, but as a war on inefficiency. The problem we are trying to solve relates to mobility: What’s the best way to move lots of people around dense urban regions? Stop focusing so much on the technologies and focus more on the people.

  Image: Flickr

  2014.10.13

• Taxis just got 40% cheaper in Toronto

  UberX officially launched in Toronto today. Which means that Toronto’s taxi and limousine industry is about to get a lot more grouchy. For those of you who may not be familiar, uberX is Uber’s low-cost car service. Just like the regular version, you hail a car using your mobile phone. But this option will cost you 40% less than a regular taxi!

  Here are sample rates from the Financial District to Yonge & Eglinton (midtown):

  

  And from the Financial District to Pearson International Airport:

  

  This is pretty exciting. Because as much as I think it’s great to use Hailo or Uber to hail and then pay for a car, the big problem in my mind has always been that cabs in Toronto are just far too expensive. The meter starts at $4.25 and shoots up faster than you can take a selfie in the backseat.

  But obviously there’s an entrenched industry here that is not going to be happy about a startup eating into their fares. So I wouldn’t be surprised if we see a lot more backlash here in Toronto – as has been the case in many other cities. However I don’t think that’s a viable long term solution for the incumbents.

  Uber is thought to be worth $18.2 billion right now. It’s probably not going to go away.

  So instead of protesting and trying to ban it, we should be figuring out how to adjust to this changing reality. For the incumbents, this might mean lowering fares or figuring out a better way to differentiate themselves. A 40% discount is a pretty compelling value proposition. For me personally, I don’t know why I would ever pay more for a regular taxi, unless there was no other option.

  On a side note, it’s worth pointing out that an uberX trip from downtown to Pearson is estimated to cost around $33 – roughly the same as what some people think the Union Pearson Express train will cost. That’s further evidence that charging a lot and targeting business travelers may not be the best strategy.

  2014.09.08

• More thoughts on driverless cars

  

  If you’re a regular reader of Architect This City, you’ll know that I’m a big supporter of public transit. And that’s because, as far as I can tell, it’s the most efficient way of moving lots of people around a big city.

  But more and more I’ve been thinking about how technology might change, or even disrupt, this school of thought. Which is why when I wrote this post a few days ago, I was careful to say that private cars aren’t the mobility answer. Because in reality, cars likely aren’t going to go away. We’re just going to use them differently.

  Here are the two things I’m thinking about most:

  1. Driverless cars

  I’ve written about driverless cars before in terms of how they might be used as a form of public transit. But I think it’s worth revisiting them for a moment. There are lots of driverless car critics out there and they usually fixate on the fact that a car is still a car, whether or not you happen to be driving it. It still takes up the same amount of space in our cities. Or does it?

  The key thing to keep in mind is that when we’re not longer driving the vehicle, it opens up lots of different possibilities in terms of how they might be used and also how they might be designed. I was watching this fireside chat with the founders of Google the other night and, for them, driverless cars offer the possibility of solving two big problems: traffic and parking.

  We know that parking takes up a lot space in our cities. But that’s really symptomatic of the fact that the utilization rate for most people’s cars is incredibly low. Most of the time a car is sitting parked and idle. But with driverless cars, they’ll be able to drop you off at your destination and then continue on to pick up their next ride–thereby minimizing the need for all that parking.

  This would bring the utilization rate way up for each car, which would also minimize the number of absolute cars that we’d need to have in our cities to move everybody around. Of course, this would mean that we’d be sharing cars. People wouldn’t own cars; they would be an on-demand service.

  2. Networked vehicles

  This brings us to my second point: driverless cars will be networked cars. Again, I’ve written about this before, but I specifically wanted to raise it again because of a new service that Lyft just launched in San Francisco called Lyft Line.

  The way it works is simple. You input where you’re going and Lyft will match you up with others who are going to more or less the same destination. The routes get shared and this brings down the costs to everyday use. It runs on the same principles as the on-demand minibuses I wrote about in Helsinki.

  But if you combine this with driverless cars, you’re starting to get at something incredibly interesting. Now all of sudden you’re getting the door-to-door convenience of private cars with many of the efficiencies of public transit.

  So in my mind, it’s very possible that platforms like Uber, Hailo, and Lyft could became major infrastructure backbones in a world of driverless cars. And if you think about it in this context, then I don’t think the valuations for these companies should seem all that surprising. These are potentially huge innovations.

  In the end, I don’t know how this will all shake out. I don’t think anybody does. I believe that strong public infrastructure (such as subways, light rail, and so on) will still be needed in big cities, but I’m starting to think that mobile apps and driverless cars will also form a big part of how we get around. Probably more so than most people think today.

  Image: Flickr

  2014.08.31

• Why buy a car when you’ve got mobile apps

  One of the things that many city planners, transportation experts, and municipalities are trying to figure out is how to successfully shift people away from driving towards alternative modes of transportation, such as biking and transit. Now, this is no easy task. There are a myriad of factors that influence a person’s decision to drive or not drive–or if they should even own a car in the first place. Though, land use and density are, in my opinion, probably the biggest.

  But of all the solutions thrown around, mobile apps are typically not within the playbook. However a recent New York Times article is making the argument that it should be, because car-sharing services and apps like Uber seem to be indeed having an affect on people’s decision to own a car. And that’s because in some cities it’s actually cheaper to use Uber every day (than to own a car) and because taxi use has been shown to correlate with other (non-driving) forms of mobility.

  Paradoxically, some experts say, the increased use of ride-sharing services could also spawn renewed interest in and funding for public transportation, because people generally use taxis in conjunction with many other forms of transportation.

  In other words, if Uber and its ride-sharing competitors succeed, it wouldn’t be a stretch to see many small and midsize cities become transportation nirvanas on the order of Manhattan — places where forgoing car ownership isn’t just an outré lifestyle choice, but the preferred way to live.

  And to be honest, I don’t think this is all that far stretched. More and more I find myself wondering why I even own a car. It’s not appreciating sitting downstairs in my garage and, given the frequency in which I use it, I would definitely be better off financially if I simply used an app like Uber or Hailo more often. About the only thing those apps aren’t great for are trips to Home Depot and snowboard trips to the mountain. 

  2014.06.12

• Improving urban mobility

  If you’ve ever ridden a busy Toronto streetcar, you’ll know this story:

  You’re waiting outside in the cold for a streetcar. When one–actually 4–finally arrive all bunched up together, they’re so packed with people that you’re not actually able to get on. You try one anyways and the driver makes an announcement for everyone to “move back” so that more people can onboard via the front door. After a few minutes of people shuffling to try and get further back, you’re finally able to squeeze on–even if you are virtually sitting on the driver’s lap. You then travel about 2 blocks before the streetcar stops and the same thing repeats. The result is an absolutely infuriating mobility experience that usually makes walking the preferred choice. Who said that downtown already has enough subways?

  Over the weekend, I was watching this TED talk with Charlie Rose interviewing Larry Page of Google. One question that Rose asks Page is about why he’s so fascinated with transportation and mobility. That is, why is Google so committed to driverless cars? Page then talks about his experience of waiting for buses when he was a student at the University of Michigan and how he would think about all the inefficiencies in the system. He also talks about how half of the urban fabric of Los Angeles is made up of roads and parking lots and that this is a terrible outcome of the mobility choices made in that city.

  I’ve said before that transportation is one of the biggest challenges facing Toronto today. And I truly believe that. But that’s probably the case in most, if not all big cities. Getting people around a city efficiently is such a fundamental need. It stimulates economic growth and it improves quality of life. And those are typically the reasons why people choose to live in cities: to make money and to have a better life. 

  Now, I’m a big proponent of public transportation, but I’m also excited by the advances being made outside of mass transit. With driverless cars, electric cars, networks such as Uber and Hailo, and the emergence of the sharing economy, you could easily imagine a bunch of different ways in which mobility could be improved in our cities. Take, for my example, my own driving patterns. I probably drive my car 2, maybe 3 hours per week these days. That translates into a weekly utilization rate of roughly 1.2%! (2 hours / 168 hours week). That’s terribly inefficient. We can do better. And I think we will.

  2014.03.24