The disruption of disruptive technology (Uber)

[james_s]

There can be rules and training required without needing $700k medallions. If this sort of gouging is happening then perhaps they need to change the system, making it illegal to for a private party to sell the medallions. Maybe the whole taxi system should be a state run entity like the rest of the mass transit system? Hire professional drivers, have the car fleet owned by the same entity that owns the buses, that actually sounds pretty reasonable.

Regarding the number of cars on the road and congestion, sure that's a problem but given how bad traditional taxis are, I own my own personal car and continue to do so. A car is a car, whether it's a taxi or being driven by the person it is transporting. If there is a need to limit the number of cars on the road then why limit taxis specifically and not all cars? The whole thing just stinks like a racket and I'm sure somebody is making a whole lot of money off it otherwise it wouldn't be the way it is.


Yeah I wouldn't care if Uber prices went up a bit, or if older cars were allowed. Who cares if it's a brand new car or something 10 years old as long as it's clean and well maintained? Heck I'd even pay extra sometimes for a ride in a cool classic car if such a service existed. The real advantage of the whole system is the mobile app. Dead easy to use, put in the address you want to go to and the location and time you wish to pick up, it gives you a price and you accept, done. Car shows up at the arranged time and place and off you go. No money or credit cards exchanged directly with the driver, no language barrier, no fuss, it just works and is absolutely painless. The existing taxis are going to have to adapt to this century and implement a similar arrangement if they want to survive. Expect an ever increasing stream of propaganda if they fail and continue the downward trajectory.

[BravoV]

At the end of the day, it is not who offers the better service wins, but who can last longer wins.
Once the winner's name is ironed in a generation of people's head, that company can ask for whatever price, because it is already the monopoly.

+1 

Its all about who is the strongest to endure & survive the early days of fierce competitions and and deepest pocket to sustain that early period, its well known & understood business model.

For those who are old enough to remember when search engines roamed the earth like ... AltaVista, Yahoo etc, and for sure we're now all see what happened to the winner today. 

[EEVblog]

What I read over the last year is that lots of Uber drivers are also underpaid by UberScrooge, too little to earn a decent living on an 8-10 hour shift.
While Uber is filling its company pockets with the money that is actually earned by their "slave"drivers in the cars.

Yep they are still a massively unprofitable company that is hemorrhaging cash, how? 

[james_s]

Sure and I can sympathize with that, but change is coming whether they like it or not, either rip the bandaid off quickly or drag the suffering out for many years. I cannot fathom how someone could justify paying such an absurd amount for a taxi medallion, I mean holy cow, $700k! That's enough to pay for a full ride through a top notch university to earn a degree in anything imaginable, with enough left over to buy a modest house in some areas. It's not like driving a cab is a prestigious career that pays a load of money. Frankly I'd rather drive a garbage truck, less dealing with the public.

[EEVblog]

Sure and I can sympathize with that, but change is coming whether they like it or not, either rip the bandaid off quickly or drag the suffering out for many years.

Same thing happening here in Australia in regards to out crazy investment realestate system. There are ridiculously generous benefits for investors to leverage themselves up to the hilt with debt, and young people can't afford a home now as a result of the absurd price growth caused by the investors. But those benefits that caused the problem can't be removed say the politicians because it would impact those investors. Thin of the poor mum and dad investors with those five properties!
The answer is of course, so 'effing what! They are investors and they have to accept responsibility for taking on that debt and adapting any changes to the system that might happen. You can't legislate that the gravy train must go on forever, it's ludicrous.
I'll vote for the first politician that has the guts to say screw the investors (that includes me BTW), scrap all the ridiculous tax benefits and lift the interest rates.

[Marco]

I'll vote for the first politician that has the guts to say screw the investors (that includes me BTW), scrap all the ridiculous tax benefits and lift the interest rates.

Not saying it's exactly fair, but inflating debt overhangs away is less painful than "creative" destruction.

[orion242]

. You can't legislate that the gravy train must go on forever, it's ludicrous.
I'll vote for the first politician that has the guts to say screw the investors (that includes me BTW), scrap all the ridiculous tax benefits and lift the interest rates.

Would agree with that, however I don't think if technology X comes out and drives up unemployment by a substantial amount the costs should be bared by the tax payer either.  Somewhere their is a balance.  Putting incentives to take out debit seems ludicrous, on the flip side we do the same for farmers,oil companies, EVs, and a long list of things.  If something can't stand alone in the market, maybe it shouldn't be.  That said, things like health care become extortion by threat of death in in the free market, at least here in the US.

[james_s]

Things like health care shouldn't be free market, there is no (reasonable) alternative. Things like a taxi service almost ideal for a free market, many alternatives exist and competition benefits the consumer. A taxi service that is not profitable will go out of business and one that tries to cut too many corners to boost profit will lose either customers, employees or both and the situation will correct itself.

[EEVblog]

I'll vote for the first politician that has the guts to say screw the investors (that includes me BTW), scrap all the ridiculous tax benefits and lift the interest rates.

Not saying it's exactly fair, but inflating debt overhangs away is less painful than "creative" destruction.

It wouldn't be "destruction" to remove negative gearing and raise interest rates, far from it. It would mostly just change peoples mindsets, and that's the most important thing.
The current drop in the Sydney housing market for example after the biggest bull run in history is hopefully showing many investors, who have never ever seen house prices drop, that it can actually happen and it's not a guaranteed gravy train. They need that kick up the arse.
Australia has a housing investment culture problem the same way America has a gun culture problem.
But I'm getting off-topic...

[tszaboo]

If he wanted to drive something, he could have invested this money to become a pilot for a 747. And he would have been left with half a million dollars. Nobody and nothing will prevent you from stupid investments. If you cannot make back of the envelope calculations in the 21 century, it is the same as being the weakest guy when we were hunting for mammoths.

[Kjelt]

If he wanted to drive something, he could have invested this money to become a pilot for a 747.

Don't know how the jobmarket is today but three years ago I took a trainingflight from a C lisenced pilot, he could nowhere find a job.
He had a studydebt of €220000 and rented this plane to earn money giving first flight experiences.
He did have offers to fly with a South American airliner, but no salaryoffer, the experience was the reward.

[Marco]

It wouldn't be "destruction" to remove negative gearing and raise interest rates, far from it. It would mostly just change peoples mindsets, and that's the most important thing.

It only works if you allow banks to go bankrupt ... and make bank creditors eat the losses (you can afford to pay deposit guarantees).

A true deflationary spiral wipes out nearly everyone, creditor classes and lender classes alike. Only the landed gentry survive mostly unscathed, but those can be controlled by taxes. The modern deflation where the creditor classes are bailed out just locks a nation into a situation where growth is impossible, less a reset and more a way to cement a dystopian situation. Then again, true deflationary spirals have a nasty way of ending in war, so they aren't a good idea either.

As in so many other things I think Japan has always been the one to have it right here and literally almost everyone else has been wrong, economists have a consensus of idiocy. They persist in the idiocy till today, instead of saying "well I guess internal government debt doesn't really matter" they say, well government has to start repaying any day now, any day now, THERE IS NO ALTERNATIVE. Except of course the obvious, to which they have a self imposed blindness ... just ignore it indefinitely. There is literally no limit to how much they can "borrow" from their own central bank. It's just paper, deficits can be unsustainable at 10% debt to GDP, yet can be sustainable at 1000%, debt owned to your own central bank is almost irrelevant to the equation. Current account balance more so.

[vk6zgo]

I'll vote for the first politician that has the guts to say screw the investors (that includes me BTW), scrap all the ridiculous tax benefits and lift the interest rates.

Not saying it's exactly fair, but inflating debt overhangs away is less painful than "creative" destruction.

It wouldn't be "destruction" to remove negative gearing and raise interest rates, far from it. It would mostly just change peoples mindsets, and that's the most important thing.
The current drop in the Sydney housing market for example after the biggest bull run in history is hopefully showing many investors, who have never ever seen house prices drop, that it can actually happen and it's not a guaranteed gravy train. They need that kick up the arse.
Australia has a housing investment culture problem the same way America has a gun culture problem.
But I'm getting off-topic...

The original idea was, apparently, to increase the availability of privately funded housing, decreasing the requirement for public housing.
OK, public housing is a State responsibility, but the Feds are involved indirectly when the State whinges about needing more Federal funds.
Like always, the law of unintended consequences intervened, with so much investment going into property.

That isn't the only reason that house prices have escalated in Sydney & Melbourne, another contributing
factor is the retreat of many Public & Private organisations from the other States back to those two cities.

At one time, the ATO had large staffed premises in Perth, with the corresponding staff.
My old Super Fund had a large office where you could go in and talk to real humans.
Before I left them, they had closed down the Perth office, so if you wanted to talk with someone, they were in Sydney.
This has happened over & over with various organisations.

Of course, this is the same thing (only on a larger scale) as happened within the States, where regional towns lost their local Banks, Railway staff, Telecom Aust staff, & so on, all retreating to the State Capitols.

[helius]

They persist in the idiocy till today, instead of saying "well I guess internal government debt doesn't really matter" they say, well government has to start repaying any day now, any day now, THERE IS NO ALTERNATIVE. Except of course the obvious, to which they have a self imposed blindness ... just ignore it indefinitely. There is literally no limit to how much they can "borrow" from their own central bank. It's just paper, deficits can be unsustainable at 10% debt to GDP, yet can be sustainable at 1000%, debt owned to your own central bank is almost irrelevant to the equation.

Modern Monetary Theorists are on board with that view. It's really amusing seeing the (incoherent) objections that get raised against it.

[james_s]

If he wanted to drive something, he could have invested this money to become a pilot for a 747.

Don't know how the jobmarket is today but three years ago I took a trainingflight from a C lisenced pilot, he could nowhere find a job.
He had a studydebt of €220000 and rented this plane to earn money giving first flight experiences.
He did have offers to fly with a South American airliner, but no salaryoffer, the experience was the reward.

Getting the education doesn't guarantee anyone a job, but there is a demand out there for pilots and will continue to be for the foreseeable future. Like any job, you usually have to start at the bottom and fly for a small regional carrier for low wages, then you gain the experience and move up.

[schmitt trigger]

That said, the reality is that yellow cabs are awful. They're supposed to take you anywhere, but good luck getting one to take you to "certain" parts of the city. (Though the same can be said for Uber.) And when the shifts change and all the cars need to be at the depot, you won't be able to get a ride.

Indeed;
ask them to take you to, or to the vicinity of Times Square.

Granted. Times Square is absolutely insane. I once stayed at a hotel at 43th or 44th st between Broadway and 6th Ave, and had to walk from Penn station.

[CatalinaWOW]

The cab driver made a rational decision when he invested.  But times changed.  Uber came along.  As Blueskull says, the only way the Uber model makes sense is as a drive to achieve monopoly and then recover dollars.  I am not sure that makes sense since there are no strong barriers to other Ubers entering the market.  So how was the cab driver to predict this apparently irrational change in his market?

You can argue that the cab driver should have foreseen this market shift, but there was a many decade experience base saying this was the way the world worked.  Just like the housing investors in the US, who had 20 years of growth.  Since many only intended to be in the market long enough to flip they were only extrapolating by a few percent of the history base.  Only luck allowed some to pick the right time to jump off the carousel.

People in this field may be less sympathetic to people who can't see or expect these changes since our field has been changing more and more rapidly over the last several decades, and more rapidly than most others.  No one in our field expects their skill set to survive a career.  But the vast majority of people are still doing the same thing their grandparents did with minor trims around the edges.  A secretary has had nearly a century to transition from carbon paper on a manual typewriter through a move to the electric typewriter and finally a keyboard on a microcomputer - but the job remains unchanged in its essence.  Same for insurance salesmen, farmers and a whole list of other people.  Only recently have professions like retail clerk seen any real change, and that change is the disappearance of the job as online takes over.

[Bassman59]

There can be rules and training required without needing $700k medallions. If this sort of gouging is happening then perhaps they need to change the system, making it illegal to for a private party to sell the medallions. Maybe the whole taxi system should be a state run entity like the rest of the mass transit system? Hire professional drivers, have the car fleet owned by the same entity that owns the buses, that actually sounds pretty reasonable.

Well, see, there's the problem -- New York City has a huge mass transit system and money is not being appropriated to maintain and upgrade it. And that's because the people who can most afford to pay the taxes for those appropriations do not use public transit. They don't have to. And they don't care.

But I agree, having yellow cabs and black cars operating under the umbrella of the MTA, with licensing and route controls and all of that, would go a long way towards solving the general traffic problems in the city.

Regarding the number of cars on the road and congestion, sure that's a problem but given how bad traditional taxis are, I own my own personal car and continue to do so. A car is a car, whether it's a taxi or being driven by the person it is transporting. If there is a need to limit the number of cars on the road then why limit taxis specifically and not all cars? The whole thing just stinks like a racket and I'm sure somebody is making a whole lot of money off it otherwise it wouldn't be the way it is.

There are regular discussions about the ways to limit all vehicle traffic in the city, mostly centered around a London-style congestion tax in the form of tolls. There are two forces at work against it, though. One is technological (how does that get implemented) and the other is purely political.

Yeah I wouldn't care if Uber prices went up a bit, or if older cars were allowed. Who cares if it's a brand new car or something 10 years old as long as it's clean and well maintained? Heck I'd even pay extra sometimes for a ride in a cool classic car if such a service existed. The real advantage of the whole system is the mobile app. Dead easy to use, put in the address you want to go to and the location and time you wish to pick up, it gives you a price and you accept, done. Car shows up at the arranged time and place and off you go. No money or credit cards exchanged directly with the driver, no language barrier, no fuss, it just works and is absolutely painless. The existing taxis are going to have to adapt to this century and implement a similar arrangement if they want to survive. Expect an ever increasing stream of propaganda if they fail and continue the downward trajectory.

Oh, I agree, the thing that Uber and Lyft have done is to make the customer experience as pleasant and simple as possible. Anyone who's taken a NYC taxi and an Uber will agree about which offers the best service. Can yellow cabs improve their service, by offering the app and eliminating the cash-exchange/credit-card-swipe? Absolutely. Can cab drivers clean their fucking vehicles and not have text conversations while driving? Absolutely. And those are the real and compelling arguments for alternative services.

Part of me cringes at the destruction of peoples' livelihoods by forces beyond their control. Another part of me recognizes that, for the most part, it's the NY taxi industry that is to blame, and it was just a matter of time before that out-of-their-control force appeared.

One other thing not discussed here. The above is all about options in New York City. But what about places outside of cities?

I just got back from a weekend vacation with friends. One, who lives in Northern New Jersey, maybe 20 miles from Newark Airport, mentioned how much easier it is to get to the airport from his house. (He doesn't own a car.) You cannot hail a cab from a curb; you have to call and arrange a ride in advance. In the past, you had to arrange a day or so in advance with a black car service, which would run nearly a hundred bucks. Hopefully the car showed up on time. You could call a shared service like Super Shuttle and pay $40 and be in the van for sometimes 90 minutes. You could take mass transit, which meant a New Jersey Transit bus that went into Manhattan to the Port Authority and then another shuttle bus out to the airport. That cost about $20 and took if you were lucky two hours, most of it waiting.

Now? Wake up in the morning, do your thing, get ready, and then punch up the app and have an Uber or Lyft appear at your door within minutes. You know what the fare is in advance, and off you go. It's a lot cheaper than a black car, and a lot faster than the shuttle or mass transit option. So from a consumer point of view, it's a real win.

The real mistake is calling these services "ride sharing." That's bullshit. They are taxi services with a more efficient dispatch mechanism.

[Bassman59]

The cab driver made a rational decision when he invested.  But times changed.  Uber came along.  As Blueskull says, the only way the Uber model makes sense is as a drive to achieve monopoly and then recover dollars.  I am not sure that makes sense since there are no strong barriers to other Ubers entering the market. 

Uber has been clear: they want to be out of the human-driven car business entirely, hence the push towards driverless vehicles. It's a brand-building exercise. Money for the self-driving car R&D comes from the VCs. They're spending money to ensure the name "Uber" is synonymous with "on-demand transport," in much the same way that Xerox is a name synonymous with photocopying. (How many times do you hear someone say, "I'm calling an Uber?" instead of "I'm calling for a ride?")

[james_s]

I have no interest in driverless cars. If they switch to that model I'll switch to a different service.

[Mr. Scram]

Many people report shoddy taxi services at extortionate prices. If taxis provided a proper service for a fair price Uber wouldn't be much of a threat. It seems taxi companies liked the privilege of being protected and in turn didn't mind playing along with the stupid licencing game.

I'm not saying I fully agree with what Uber does and how it goes about its business, but you can't create an artificial vacuum and expect it to last forever. Someone will come along and show it can be done differently. Play shitty games, win stupid prizes.

[EEVblog]

Uber has been clear: they want to be out of the human-driven car business entirely, hence the push towards driverless vehicles.

And if that comes to fruition I predict a big (maybe niche) market demand for "retro" taxis with real humans you can talk to, instead of Johnny Cab.

[CatalinaWOW]

Uber has been clear: they want to be out of the human-driven car business entirely, hence the push towards driverless vehicles. It's a brand-building exercise. Money for the self-driving car R&D comes from the VCs. They're spending money to ensure the name "Uber" is synonymous with "on-demand transport," in much the same way that Xerox is a name synonymous with photocopying. (How many times do you hear someone say, "I'm calling an Uber?" instead of "I'm calling for a ride?")

Totally agree with what they are doing.  But do you do your Xerox's on a Xerox machine, or one of the many others.  Do you buy BandAid brand bandages and Kleenex tissues?  In each of these cases the barrier for competitor entry was higher than for Uber's product.  Uber has a very high risk long term business plan.  Made riskier by the plan to take on the capital costs of the vehicle fleet and the liability issues with a very new technology that may or may not be ready for prime time in the next decade or two.

[Mr. Scram]

And if that comes to fruition I predict a big (maybe niche) market demand for "retro" taxis with real humans you can talk to, instead of Johnny Cab.

Someone will figure out he can outfit the automated cabs with a television screens and an uplink to an Indian call centre with real human cabby stand-ins.

[james_s]

Many people report shoddy taxi services at extortionate prices. If taxis provided a proper service for a fair price Uber wouldn't be much of a threat. It seems taxi companies liked the privilege of being protected and in turn didn't mind playing along with the stupid licencing game.

I'm not saying I fully agree with what Uber does and how it goes about its business, but you can't create an artificial vacuum and expect it to last forever. Someone will come along and show it can be done differently. Play shitty games, win stupid prizes.

That's the thing, being a protected monopoly they have long had absolutely *no* reason to provide anything resembling reasonable service, because if you don't like what they offer, what are you gonna do? Regardless of what one thinks of Uber, I'm happy to see some competition. The traditional taxi services *could* get their act together, implement a nice modern web/app hailing system, keep their cars clean and be friendly to customers. Unfortunately I suspect most of them will instead fight tooth and nail in a losing battle to stamp out the competition. They will not go down quietly, expect a constant stream of propaganda, lawsuits, political lobbying, protests, and slandering of alternate ride providers at every opportunity.