Uber and Lyft competitors ready if service is suspended in California
cnbc.com
cnbc.com
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 normal times, I don't even try to use them for airport trips; just book a private car.
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.
[1]https://www.vox.com/the-goods/2019/1/11/18179036/uber-lyft-r...
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.
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.
For my lifestyle, owning a car would be the "luxury", not ride sharing.
Their last sentence is a straw man from out of nowhere. That's what got me in action.
More than 10% of Americans live below the federal poverty line (individual income of <$12k, family of 4 income less than <$26k)
https://www.npr.org/2019/09/10/759512938/u-s-census-bureau-r...
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".
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.
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.
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.
I think its the opposite of conservative to ignore the greatest cost of being an uber driver - your car.
Drivers received about $23.50/hr according to it.
The Parrot and Reich recommendations https://irle.berkeley.edu/files/2020/07/Parrott-Reich-Seattl... are much more generous in terms of estimating expenses. Neither considers a company car model which might imply drivers taking shifts in one vehicle.
Though, to the general point, a minimum wage driver is probably not as big a proportion of rental vehicle costs as many assume.
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.
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.
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.
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.
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.
It's honestly so destructive for these anti competitive business practices to pour VC money into a market.
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.
One accuses Uber of creative accounting to attempt to make the rideshare business look profitable.
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.
https://www.forbes.com/sites/lensherman/2019/08/22/ubers-dub...
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.
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.
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.
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.
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'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?"
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.
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.
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.
Which laws? Do they exist now?
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.
Why?
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 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
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]
[0]https://www.usatoday.com/story/news/nation-now/2018/03/02/ub...
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.
You want to help these people out? Get rid of most occupational licensing.
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).
There are still good reasons to drive below minimum wage.
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.
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.
How presumptive of you.
[1] https://investor.uber.com/news-events/news/press-release-det...
This is exactly the opposite of what happened in Austin.
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.
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.
There's no indication current bar isn't too high, tho
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.
https://investor.uber.com/news-events/news/press-release-det...
That has no bearing on whether such a ban is a good idea.
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.
... so we get legroom reduced every year, mandatory fuel surcharges, ticket printing fees, etc? No, thank you
Uber and Lyft’s board would absolutely loose their mind if executive leadership decided to just exit, once again, the 5th largest economy in the world
The real threat, as I see it, is other states enacting similar laws that will have a domino effect.
> “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.”
[0] https://nymag.com/intelligencer/2019/04/uber-s-1-new-york-ci...
Stopping service now would leave customers scrambling, but would also give them a strong incentive to vote for that proposition in November.
Although I'm sure the companies will say these two things are not connected in any way.
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.
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.
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.)
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.
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.
>"[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.
Edit: reword to be easier to read.
That left me with the impression that cabbies rented the money to buy access to the market, and were paid enough to afford it.
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.
https://en.wikipedia.org/wiki/Taxicabs_of_New_York_City says "most medallions (and most cabs) are owned by investment companies and are leased to drivers"
When figuring in all the costs, like car depreciation and maintenance, they actually earn less than they spend.
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.
[1] https://orfe.princeton.edu/~alaink/SmartDrivingCars/PDFs/Zoe...
[2] https://www.vox.com/2018/3/3/17074782/uber-mit-study-less-th...
1. https://www.npr.org/sections/thetwo-way/2018/03/07/591430857...
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).
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.
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?
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.
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.
Purchasing gasoline from a gas station is a highly commoditized transaction; what makes it more or less "legitimate"?