Uber Is Currently Fighting the Battle That Jitneys Lost 100 Years Ago

These middlemen are a kind of legal pimp that exist all over the United States.

Salons are middlemen for hairstylists. Hollywood middlemen for movie directors. Labels are middlemen for musical artists. Google is a middleman for advertizers/people's private information. At a larger scale, credit card processing companies are a middlemen between EVERYTHING.

The pimp/middleman taxes what would normally be a direct market transaction between two willing parties. Presumably in a free market (we're getting crazy here and granting classical market analysis some of its claims), two parties will undergo a transaction only if it benefits both parties. This is one of the fundamental justifications for market systems of wealth distribution and social organization. (It ignores whether the transaction hurts third parties to that exchange - externalities - but that's a side discussion).

What a pimp does is take some of the value from the transaction for himself in return for organizing the transaction. In cases where the pimp hasn't actually added any value (he wasn't really required for the exchange) he is said to be "rent seeking" (https://en.wikipedia.org/wiki/Rent-seeking). The classical example of this is chaining over a public river system and charging people to run their boat down it. In this case no value has been added to the river by the chaining, in fact value was extracted and concentrated into private hands.

The situation is less clear when the pimp does add some value. In the case of prostitution a pimp provides security and a first check that the 'John' isn't law enforcement. In the case of credit card companies, they facilitate the exchange of dollars over wires and track down fraudulent transactions (security). In the case of Uber, they provide checks on customers and checks on renters (security). Security is popular. But it isn't always the case. Some pimps provide an upfront investment in machinery, such as mirrors/air conditioning/shampoos. Other times the pimp takes a financial risk.

It isn't always clear when a middleman is a good deal. When is your pimp robbing you as an employee? As a customer? As a service provider? Many small and medium businesses struggle with credit card processing fees as the charges cut into what are usually small profit margins to begin with. Having built the infrastructure once and not having improved on it, do credit card processing companies deserve 3% (I don't know what it is) of every monetary transaction? That's half of most sales taxes, but it goes into private hands. Is the value of providing that infrastructure enough to justify the costs? After how many years does an infrastructure have be in place before it is considered a public good?

The internet was supposed to be democratizing in that it would facilitate direct transactions where there weren't any before. People with information could get it to those that needed it without having news organizations filtering it. Musicians could release without labels taking their cut. Coders could sell programs without coordinating with software stores. But today there are appstores and there are wire transfer services and there are online banks and online social filter systems. Google, Paypal, Comcast, smartphone and device manufacturers and carriers, Amazon, Facebook, Twitter, Apple store, etc all take their slice.

When is it okay to put a chain across a river? What if the river is first dug deeper, or if someone puts up signs? And how long is it okay to leave the chain up?

He's referring to the accusation that Uber employees are deliberately ordering and then, shortly afterwards, cancelling rides with competitors' services in order to screw with the dispatch system and waste the drivers' time.

Ha. The problem in such places isn't transportation regulation, it's basic rule of law. Kidnapping is already against the law, as is charging more for a service than you advertise.

Yup, in Manila Uber and similar services like grab taxi are becoming really popular because of the dangers in riding regular cabs.

The focus on safety is a straw man. If the only purpose of regulations was safety, there would be no need at all to limit the supply. Uber wouldn't be opposed to require drivers to obtain a proper hire-car licence, the beef is with the artificial limiting of supply that prevents competition.

Source: in London, regulation allows unlimited numbers of "minicabs" which predates Uber but which Uber operates under.

The funniest thing about it is that if you're doing it and notice an actual cab approaching, you quickly put your hand down. People prefer hacks.

FlyWheel is the main "official cab app" player in SF; it's advertised on most cabs.

I think you misunderstand how network effects work. What you're talking about is too localized and transient to really be considered network effects -- I can also share rides in a normal taxi if I hail a cab with 2 friends. A key component of a true network effect is that it enables exponential scalability: Facebook is the textbook example here in that it becomes more useful the more people use it. Another key component of network effects is that they enable platform lock-in by creating enormous barriers to entry for potential competition.

Uber enjoys a small amount of the second component through their large driver network; but taxi drivers are more or less a commodity so there aren't really barriers to entry for a competitor to go hire a bunch of drivers. With Facebook, there's more lock-in: even if lots of people are on a competing service, if YOUR friends aren't, it has no increased value. There is no such personal component with Uber.

Eventually, what I see happening are a number of competing services popping up that drive down the payments that drivers receive. This will eventually bottom out the market for taxi drivers to a supply/demand equilibrium point, which is exactly what's supposed to happen in a commodity market.

My guess is that Uber's long-term plan is a brand play: everyone with even a little bit of future vision knows that self-driving cars are right around the corner, and Uber is trying to establish itself as the premier on-demand transportation service before that happens. Because once self-driving cars ARE available, anyone with deep pockets will just be able to buy a fleet and put them on the road. If Uber can establish itself before that happens, they'll have differentiated themselves with the strength of their brand, which again is the optimal strategy in a commoditized market. But I see Uber being the #1 company in a crowded market with a ~20-30% market share; not 70-90% as is often seen in markets with strong network effects.

It's important to understand that the medallion mess is a local issue. Uber is acting like a bully with no regard for the law even in places where getting a taxi license is basically just a simple extension to your regular driver's license.

I wonder what'd be like if individual taxi drivers had online reputations and histories like ebay sellers.. then that could be really useful. You could even take a cab in a not-so-safe country with confidence. The problem here is what if a different driver arrives (I suppose the website should have a photo of the driver that one should expect.)

Also, successful drivers themselves may become targets for whatever reason.

Could work for the driver if they can transfer between companies and keep their reputations. They could even relocate.

Another future industry that could be disrupted in such a manner: personal security and tour guides .. used in countries that are generally unsafe.

Is there an ebay/uber for tour guides?

That's still the saving grace to me. Every Uber driver I've talked to was happy to have the job and felt like they were making good money.