Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Tag: taxis

  • San Francisco now has autonomous vehicle taxis

    These are two short videos of autonomous Cruise vehicles driving around San Francisco. Cruise, which is owned by General Motors, received a permit from the state of California to operate autonomous vehicles — without a safety driver — in September of last year. In November 2021, one of the cofounders of Cruise took the first ever driverless taxi ride in the company’s history. And on February 1, 2022, Cruise announced that it was opening up to the public.

    If you read the comments on Twitter you’ll see that some people have found these vehicles to be hyper reactive to traffic lights and to do oddly long pauses at stop signs. So I guess they’re not perfect. But oddly long pauses are certainly better than not stopping at all. Either way, this is a big deal. I’m not sure if these are the first unsupervised autonomous vehicles out in the wild, but they are easily some of the first.

    There has been a lot of discussion over the last few years about autonomy being a hugely tricky technical problem to solve. One that is perhaps more difficult than a lot of people thought it would be at the outset. I’m assuming that this is at least one of the reasons why ridesharing companies like Uber and Lyft ended up selling off their AV divisions while searching for profitability.

    But the market never gave up and it’s pretty exciting to see this coming to fruition. Oliver Cameron is VP, Product at Cruise and the former CEO of Voyage (which was acquired by Cruise last year). If his tweets (above) are any indication, San Francisco is going to be seeing many more autonomous vehicles in the coming months.

    This is going to have a profound impact on the unit economics for ride sharing companies like Uber, but more importantly it is likely to have a profound impact on our cities. Mobility innovations have a way of doing that. Some of the impacts might be negative, but I believe that many of the impacts can and will be positive.

    As most of you will know, I am a believer in dense and walkable cities. I do not believe in planning cities around cars. And so that is not what I am advocating for here. My view is simply that I think autonomy grants us the ability to rethink our definition of a “vehicle.” And maybe it becomes something that more closely resembles public transit. That could be a positive thing for our cities and something that draws people away from private vehicle ownership.

    So I remain both optimistic and excited about what’s to come.

    Have any of you had a chance to ride in an autonomous vehicle? If so, leave a comment below or on Twitter.

  • Mobility at CES

    CES is underway right now in Las Vegas. About 200,000 people are in attendance. 

    Since tech and mobility are today closely intertwined, the show has become an important platform for the automative industry.

    Here is a video showcasing BMW’s new iNext concept (expected by 2021):

    [youtube https://www.youtube.com/watch?v=x9-f3cALABk&w=560&h=315]

    It is based on level 3 autonomy, which means the car will do mostly everything, but you need to be ready to take over at any time.

    The video is interesting because it begins to show you what becomes possible when you no longer need to pay attention to the road. It is a bit like flying (but hopefully more enjoyable). 

    And here is a video of Bell’s new urban air taxi, which is called Nexus (expected by the mid-2020s):

    [youtube https://www.youtube.com/watch?v=1o4d8N-A1G8&w=560&h=315]

    This is the company’s first concept. But they’ve been working with Uber since 2017 to develop a network of flying taxis for cities.

    Finally, flying cars.

  • Minimum fleet

    Here is an interesting study by the MIT Senseable City Lab, which looks at: “the minimum number of vehicles needed to serve all the trips in New York without delaying passengers’ pick up times.” If you can’t see the embedded video below, click here.

    [youtube https://www.youtube.com/watch?v=nFo64kBGF6o&w=560&h=315]

    This is interesting because it begins to quantify the amount of waste running through the system today and the possible efficiencies brought about by autonomous vehicles. In this model, the current taxi fleet in NYC could be reduced by 40%.

    For more on the study, go here.

  • Centralized taxi branding vs. decentralized ride fulfillment

    Back in 2013, when this blog was in its infancy, I argued that Toronto needs a consistent taxi brand. Since nobody was reading the blog at the time, I am sure that most of you have never read this post. I even forgot about it, until last night when I posted this photo of Hong Kong to Instagram:

    It reminded me of the role that taxis play in city branding. This photo is clearly of Hong Kong. But take away the taxis in the foreground and I would really have to think in order to identity it. I would then be searching for street signs and looking to see what side of the road the cars are driving on.

    Now, a few things have changed since 2013. Back then I didn’t have the same appreciation for decentralized ride hailing (Uber and Lyft), though I did have the same distaste for the taxi cartel. And I recognize that there is a tension between centralized taxi branding and a decentralized approach to ride fulfillment. 

    I’m not exactly sure how to solve this problem, but maybe it gets easier with autonomous vehicles and probable changes to the way consumers own, or don’t own cars. I believe it’s important for places and cities to have specificity. If you have any thoughts, please leave a comment below. 

    (I am trying to respond to all comments on this blog, because I’m finding it impossible to respond to all blog related emails. Sorry.)

  • Should Uber be shut down?

    image

    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

  • The self-driving car arms race

    Earlier this month, I came across the following chart from USA today. 

    image

    It was based on market caps as at July 29 and so the order wouldn’t look quite the same today. Still, here are the largest companies by market cap and the top 5 are US consumer-facing technology firms.

    Remember when it was a big deal that Apple had surpassed Exxon Mobil as the world’s most valuable company?

    We are living in a tech-driven world.

    Then yesterday, I was reading this New York Times article talking about Uber’s acquisition of Otto (a startup focused on self-driving truck technology) and its plans to allow riders in Pittsburgh to summon self-driving vehicles later this month.

    The vehicle will be a tricked out Volvo:

    image

    These two snippets from the NY Times stood out for me:

    Suddenly, it seems, both Silicon Valley and Detroit are doubling down on their bets for autonomous vehicles. And in what could emerge as a self-driving-car arms race, the players are investing in, or partnering with, or buying outright the specialty companies most focused on the requisite hardware, software and artificial intelligence capabilities.

    “There’s an urgency to our mission about being part of the future,” Travis Kalanick, Uber’s chief executive, said on Thursday in an interview. “This is not a side project. This is existential for us.”

    The way it will work in Pittsburgh this summer is that the self-driving Volvos will still arrive with a driver, in addition to a sidekick in the passenger seat taking notes about how the vehicle is performing. But the goal is to start weaning us off of human drivers. These pilot rides will be free to start.

    This is quite possibly the start of a general change in terms of the way cities operate (quote from Bloomberg):

    In the long run, Kalanick says, prices will fall so low that the per-mile cost of travel, even for long trips in rural areas, will be cheaper in a driverless Uber than in a private car. “That could be seen as a threat,” says Volvo Cars CEO Hakan Samuelsson. “We see it as an opportunity.”

    Uber is currently logging about 100 million miles per day. Hopefully it is clear at this point that this is not as simple as ride sharing vs. traditional taxis. Cities who are thinking about it in this way are thinking short-term and missing the bigger picture.

    Companies such as Uber, Tesla, and Google are aiming for a fundamental rethink of urban mobility. There is an arms race going on that I believe will completely eradicate the need for human drivers.

  • Protect me from what I want

    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.

  • Tech Tuesday: Uber testing out “Smart Routes” in San Francisco

    Uber is currently testing out something called “Smart Routes” in San Francisco.

    Basically it works similar to UberPOOL (where you carpool with strangers to bring the cost down), except that your pickup location (and trip?) is confined to a specific route. 

    This means less detours and more rides for drivers, as well as even cheaper fares for passengers. But just like public transit, you’ll likely have to walk a few minutes to get to the closest route. 

    Here’s a screenshot of what that looks like (via TechCrunch):

    The green line is the “Smart Route.” So all you have to do is select a pickup location somewhere along that green line, and you’ll save a bit a money. Currently it’s “$1 or more” off your fare, but who knows what it might be when this feature actually rolls out.

    This is fascinating to me because it’s starting to look and feel a lot like a conventional bus route. But in this case, the routes can change and new routes can be easily created as demand changes. 

    So it’s not just taxis that need to be thinking about Uber. It’s public transit authorities as well.

  • Where Uber operates and where it’s banned

    Earlier this month, Bloomberg published this map showing where Uber operates and where it’s been banned (or is being challenged). You can click on the map for a larger version.

    image

    Uber operates in about 250 cities across the world. But it’s being challenged in a lot of them, including Portland, San Francisco, Los Angeles, Toronto, Rio de Janeiro, Paris, Berlin, as well as others.

    I don’t want to dismiss any of the safety concerns that have arisen lately, because those are very serious and they need to be addressed. Life safety is paramount. But I continue to believe that banning a service that many people clearly want to use isn’t the right solution.

    On top of that, I think it could lull many of the local taxi communities into a false sense of security about the future. Uber is moving incredibly quickly. UberX launched in Toronto in September of this year. And UberPOOL – their new carpool service – is likely next.

    With these releases, Uber is working towards a specific vision for the future: Their goal is to eliminate the need for private vehicle ownership. Should they be successful, this will not only impact taxis, but also car manufacturers and urban mobility in its entirety.

    So as difficult as it might seem right now, I think urban leaders would be better served trying to figure out how to harness these innovations. Cities have been trying for decades to get people out of their cars. Uber wants to do the same.

  • Comparing taxis to ride sharing services

    This morning I woke up to a post from venture capitalist Fred Wilson talking about the cost of loyalty when it comes to local transportation markets. More simply, it was a cost comparison between regular city taxis and ride sharing services such as a UberX, Lyft, and Sidecar in San Francisco, Los Angeles, and New York.

    The data was sourced from whatsthefare.com and looks like this:

    The way to understand this chart is to think about it as the answer to this question (from whatsthefare.com): If I were to take 1,000 rides over my lifetime with one individual service, how much more would I pay than if I compared prices and always picked the cheapest option?

    What you should immediately see is that regular taxis are far more expensive in San Francisco and Los Angeles compared to all of the ride sharing services. In the words of Fred Wilson: “That is crazy. They are going to go out of business in those markets with that pricing.”

    In my words: They are fucked.

    I wonder where Toronto would place against these cities. My gut tells me that we would be closer to San Francisco than New York. And if that is the case, I think you can figure out what that means.

    I thought this would be an interesting post given yesterday’s point about our cities being multi-modal. We urbanites have many more options at our disposal than we did only a few years ago. And if they’re cheaper and more convenient, we’re going to use them. I think that’s a good thing.