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SF Yellow Cab to file for bankruptcy

204 points by coloneltcb 11y ago

grandalf 11y ago
It will be interesting if there is room for traditional cab companies after the market stabilizes. Uber and Lyft have been effectively subsidizing fares at the same time as providing superior service. It is not really clear what level of service the market demands without loads of venture capital helping to subsidize it.
nodesocket 11y ago
This was bound to happen, just a matter of time. Uber and Lyft are able to operate at much lower costs, and additionally have basically an unlimited supply of capital (VC investment). Traditional businesses have no chance of being competitive in this market.
- kzhahou 11y ago
  What makes U&L lower cost? Just the lack of driver health insurance and benefits?
  - mahouse 11y ago
    If you think that's not much, think of the difference in taxes between the US and northern Europe.
    - toomuchtodo 11y ago
      So your business is workable because it evades taxes? What is this, Russia?
      - mahouse 11y ago
        I'm not saying it's Uber's case, but yes, in many cases, some businesses only exist because they evade taxes. That's the reason lobbies exist.
        toomuchtodo 11y ago
        My argument is that we shouldn't allow businesses to exist that flout the law, taxes or otherwise.
        Grishnakh 11y ago
        So you think we should shut down the oil companies and agriculture companies and all the large banks?
        toomuchtodo 11y ago
        > oil companies Yes. They've known about their products causing climate change for decades. They should be liquidated. > agriculture companies Some, not all. > and all the large banks Only the ones that are "too big to fail" or those engaged in illegal activities.
        Grishnakh 11y ago
        Sounds all good to me, but good luck getting Congress to go along with that.
        saryant 11y ago
        So... who provides the energy that makes our lifestyle possible is this magical world of yours?
        toomuchtodo 11y ago
        Oh come on. Enough sunlight hits the earth in an hour to power worldwide consumption for a year. It takes an infinitesimal amount of land if you were going to use solar alone [1]. There is enough wind power potential in the US midwest, from North Dakota to Texas, to power the entire US 4x over [2]. There's enough generation capacity to move 77% of light vehicles in the US over to electric immediately. There's plenty of energy to go around. Fun fact: The latest budget bill that passed at the end of 2015 had one of the largest subsidies (ITC production tax credit) for solar and wind generation installation ever. [1] http://cleantechnica.com/files/2015/05/Land-art-AreaRequired1000.jpg http://cleantechnica.com/files/2015/05/Land-art-AreaRequired... [2] http://www.energy.gov/sites/prod/files/2015/05/f22/Enabling-Wind-Power-Nationwide_18MAY2015_FINAL.pdf http://www.energy.gov/sites/prod/files/2015/05/f22/Enabling-... (page 6)
      - theworstshill 11y ago
        Jokes on you, taxes in Russia are a flat 10% last I heard. Edit: why do you think its that small? Yes, because noone paid it when it was larger.
  - thephyber 11y ago
    Taxi companies don't necessarily hire employees. The whole medallion controversy in NYC was that the market value of the medallion had outpaced the rent the taxi owner could charge the driver for that shift. * U&L don't own the cars, so they don't need to enforce a price floor to stay n business. If the drivers in one city saturate the market and driving becomes unprofitable, U&L lose some rev-share, but no capital investments. * Taxi companies are required to disclose their costs on the outside of their car (in most jurisdictions), meaning it can't change often like U&L's dynamic pricing and it also acts as a price floor where U&L don't have one. * Also, U&L can hire more drivers than the fixed number of taxis in any jurisdiction defined by the government, thus moving the city higher on the supply curve and driving down the cost below what taxi companies need to cover their expenses.
  - Animats 11y ago
    Basically, yes. Yellow Cab is in trouble because they lost some liability lawsuits.[1] In one, they only had $1M in coverage and had to pay out $8M. [1] http://www.sfgate.com/business/article/SF-jury-finds-Yellow-Cab-liable-for-8M-accident-6352539.php http://www.sfgate.com/business/article/SF-jury-finds-Yellow-...
  - fweespeech 11y ago
    Lack of driver health insurance, lack of benefits, lack of liability from crashes, reduced compliance costs via skirting local regulations [e.g. Background checks for Uber/Lyft are cheaper than the more thorough checks in some municipalities] http://www.texastribune.org/2015/10/07/background-checks-center-city-fights-uber/ http://www.texastribune.org/2015/10/07/background-checks-cen... http://www.cnet.com/news/ubers-background-checks-dont-catch-criminals-says-houston/ http://www.cnet.com/news/ubers-background-checks-dont-catch-...
    - Grishnakh 11y ago
      Background checks are a canard. How do the cab companies check the background of someone from Uzbekistan? They can't, they can only go back as far as that person has been in the country, which isn't very long judging by their mastery of English. U/L do carry insurance for their drivers when they're driving a passenger, and it's probably more than the regular cab companies carry (which is why SF Yellow cab is going bankrupt: they weren't insured for enough for one of their incompetent drivers, according to the article). Also, U/L have deeper pockets than any local cab company/coop, so civil suits will net higher payouts too if it came to that. As for health insurance, from what I've read a lot of cab drivers aren't full-time employees either, so they also don't get health insurance, or benefits.
      - fweespeech 11y ago
        > Background checks are a canard. How do the cab companies check the background of someone from Uzbekistan? In other words, "Hey, Uber hires known felons and its okay because I can think of a scenario where background checks fail." By that logic, stop visiting the doctor, using seat belts, or any safety device known to man because it can fail for some non-0 fraction of the time. > U/L do carry insurance for their drivers when they're driving a passenger, and it's probably more than the regular cab companies carry (which is why SF Yellow cab is going bankrupt: they weren't insured for enough for one of their incompetent drivers, according to the article) http://www.propertycasualty360.com/2015/02/09/uh-ohuber-has-some-coverage-issues http://www.propertycasualty360.com/2015/02/09/uh-ohuber-has-... http://www.buzzfeed.com/kenbensinger/ubers-yawning-insurance-gap#.edxlxR64w http://www.buzzfeed.com/kenbensinger/ubers-yawning-insurance... http://www.forbes.com/sites/harrycampbell/2015/10/07/why-are-so-many-las-vegas-uber-drivers-lying-to-their-insurance-companies/2/ http://www.forbes.com/sites/harrycampbell/2015/10/07/why-are... > Drivers can answer no and effectively lie to their insurance company (while also committing insurance fraud) but still receive coverage, or they can say yes and they would be immediately denied coverage. Additionally, they could even be dropped from their policy for disclosing that they are a rideshare driver. > Since it’s not really in Uber’s best interest to disclose the lack of collision coverage during Period 1, many drivers don’t discover that they’re not covered until it’s too late. I’ve been researching rideshare insurance options in Nevada since Uber went live and spoken with hundreds of Uber drivers yet we haven’t been able to find a single insurance carrier willing to insure rideshare drivers. Some carriers offer a commercial policy but the cost is prohibitive at $3,000-$5,000 a year. > Meanwhile, risk-averse insurance companies have been excruciatingly slow to adapt to this new and innovative form of transportation. I maintain an up to date list of insurance options by state for Uber drivers on my site and you’ll notice that Nevada is not currently on that list. There literally isn’t a single option for drivers which unfortunately is somewhat typical. A majority of states in the US still don’t offer a rideshare friendly personal insurance or hybrid policy for Uber drivers which means a whole lot of drivers are forced to lie to their insurance carriers or find a different line of work. There are some pretty significant gaps in that coverage that shift the burden to drivers, depending on the state. In fact there is an entire business built around the fact there are massive holes in that policy: https://www.metromile.com/uber/ https://www.metromile.com/uber/ > Traditional auto insurance policies may not provide clear coverage for drivers who participate in ridesharing programs. The partnership between Uber and Metromile means you’re insured 24/7, whether you’re using your car for personal use or driving with Uber. Now, Metromile offers complete clarity to Uber driver partners. The difference with Uber is the driver gets fucked instead of the Taxi/Uber company. > As for health insurance, from what I've read a lot of cab drivers aren't full-time employees either, so they also don't get health insurance, or benefits. I'm not even going to bother with this one. I've pointed out enough holes already.
  - gkoberger 11y ago
    There's a lot of snarky answers, but some things off the top of my head why Uber can be cheaper: * More efficient (less down-time driving around) * People use their own cars (no need to buy/maintain taxis) * Less overhead (no need for managers, dispatchers, etc) * No taxi medallions * More popular, so more rides * Subsidized by VC money (Okay, kinda snarky, but legitimate) The last point about subsidization sounds bad, but their goal is (likely) to just get enough market share that they've already won by the time self-driving cars come out (and can cut costs significantly then).
    - artursapek 11y ago
      I am really looking forward to self-driving cabs. When I see what the job does to people I usually feel bad for them. It sucks getting in a cab whose driver is a jerk, but I honestly can't expect them to be happy with a job like that. People shouldn't have to be doing that job.
  - Tiktaalik 11y ago
    I'm not up to date with the state of SF transportation rules and U&L. Are U&L still ignoring rules designed to provide access to those with disabilities? This article is pretty old at this point (2014) and I don't know if the situation has changed for the better. http://www.sfgate.com/news/article/As-Uber-Lyft-Sidecar-grow-so-do-concerns-of-5240889.php http://www.sfgate.com/news/article/As-Uber-Lyft-Sidecar-grow... Ignoring the people with disabilities, as they are more expensive to service is one (problematic) way to lower costs.
    - fancyketchup 11y ago
      > Are U&L still ignoring rules designed to provide access to those with disabilities? In my city one of the options (besides SUV, black car, etc) is for persons with disabilities. The app seems to have some options to switch between requesting a driver with a wheelchair-compatible car and the city's own paratransit service. I've never used it myself, so I can't comment on the implementation.
- toomanybeersies 11y ago
  It is a bit concerning that Uber is hemorrhaging money right now, being able to cost themselves lower than conventional cabs because they have such a massive amount of capital. Outpricing your competition by making a loss/no profit is a nasty tactic, especially when your competition can't compete at a loss (for whatever reasons) and then goes out of business, only for the surviving business to then rise their prices to whatever point they want, given that there is now no competition.
  - criddell 11y ago
    > being able to cost themselves lower than conventional cabs because they have such a massive amount of capital Is Uber less expensive than regular cabs? My experience in Uber so far has been uniformly excellent and my experience in regular cabs has ranged between ok and dismal. I think I would probably be willing to pay around a 25% premium to use Uber over a regular cab. The traditional taxi operators haven't needed to care about customer experience for so long, that I'm not sure they can change.
    - mikeash 11y ago
      UberX typically is cheaper than a cab. The price is the same or lower, and you don't tip. If you go for a black car it's a bit pricier.
    - toomanybeersies 11y ago
      UberX is the only Uber available in NZ, and without surge pricing it's about 25% cheaper than a normal cab, and almost half the price for me to get to the airport, due to outrageous taxi fees at the airport. Uber in NZ also operates much closer to a Taxi too, drivers must have a P endorsement, which allows you to commercially charge passengers, and requires you to pass a test and have a govt run background check, and have a clearly visible govt issued ID card while carrying passengers. Most of the drivers for uber are therefore former taxi drivers, who drive for uber because it pays better and gives better flexibility.
Grishnakh 11y ago
Too bad, so sad... If they hadn't allowed their service to get so horrible, with nasty old cars, drivers that don't speak English and drive around in circles to increase fares, drivers claiming their card readers are "broken" so you have to pay cash, taking an hour to show up when called, passing by black people, etc., then this wouldn't be happening. From the article: "Cab drivers, on the other hand, maintain that they undergo more rigorous criminal checks, enjoy more robust insurance, and generally have better knowledge of city streets." Who cares about knowledge of city streets? Haven't they heard of Google Maps and Waze and GPS? This just shows how out-of-touch and behind-the-times the cab industry is. The insurance is a canard, as Uber insures their drivers for more than the cab companies (the problem with Uber is what happens when you don't have a paying rider). And criminal background checks are useless if you haven't been in the country very long; how are they going to check your background in Pakistan? Also, the Uber/Lyft reputation systems are far more valuable anyway, plus Uber/Lyft keep detailed records of all their drivers' movements when they have riders, so it's pretty hard for them to get away with anything; cabs aren't guaranteed to have any of that oversight. And apparently driving for Uber isn't that bad, since the cab companies are now complaining that all the good drivers are switching to Uber/Lyft, leaving them with crappy drivers who earn them huge lawsuits for accidents they cause.
- Grishnakh 11y ago
  Wow, this is weird, I'm being modded way up. I was expecting the reverse: on another, much older "tech news" site, any time the Uber/Lyft vs. cabs debate comes up, there's a very strong contingent of people there who absolutely hate Uber/Lyft and go on and on about how wonderful cabs are.
  - santaclaus 11y ago
    The Ars Technica readership seem to loathe Uber.
    - Grishnakh 11y ago
      Actually, I was talking about Slashdot.
kw71 11y ago
What's it like to ride in a SF taxi? I'm not a frequent taxi user, but last time I rode in an NYC cab, the partition made me feel like I was going to jail and the advertising screen made me feel like I was riding public transportation. No doubt the normal private cars are more comfortable.
- Hilyin 11y ago
  This, a million times this. Also, taxi drivers could care less about your ride experience. No way to rate them and cause any change, so they just treat everyone like crap.
- artursapek 11y ago
  The ad screen almost feels inhumane. There's no way to turn it off or even dim it. After a long flight, having that thing in your face can be really unpleasant. It's my biggest gripe with NYC cabs. It's just too 1984 for my taste.
  - marrone12 11y ago
    You definitely can turn off half the ad screens, and the other half you can at least turn down the volume
  - gergles 11y ago
    What, of course there is. There's a red button in the lower-right hand corner you can hit to turn it off in most cabs; granted, there are some where you cannot turn the screen 'off' but you can turn off the display of advertising on it (and it just then says "Touch here to resume").
    - artursapek 11y ago
      That "off button" doesn't turn it off, it makes it goes into a silent slideshow mode showing you more ads with an equally bright screen. Point is you can't win against the ad machine.
deleted 11y ago
[deleted]
jayess 11y ago
I love the smell of creative destruction in the morning.
bobby_9x 11y ago
Uber/Lyft are very interesting. The main reason cabs are so terrible is because the unions have a complete stranglehold on the industry, which means pretty much no advancement in technology and monopolistic pricing. They both are basically going against everything the unions stand for by not having regular wages or benefits. Edit: Admitting you're wrong is not something most people here on HN can do. Instead, they downvote.
- Grishnakh 11y ago
  Um, I thought the reason cabs are so terrible is not because of unionization, but because it's a cartel, and it's given that power by the government because of the issuance of licenses (called "medallions") which ensure a limited supply of cabs, artificially restricting competition.
  - bobby_9x 11y ago
    "but because it's a cartel, and it's given that power by the government because of the issuance of licenses (called "medallions") which ensure a limited supply of cabs, artificially restricting competition." Right, the unions. It's not a corporation that is artificially restriction competition, it's the unions. These unions have deals with the government. The same thing happens in the auto industry.
    - Grishnakh 11y ago
      No, that's not a union, that's a cartel. A union is an organization of labor, not company owners. And it's the cab owners who have the deal with the government.
      - bobby_9x 11y ago
        You are just mincing words to make it seem like unions aren't the bad guy here. The auto unions, for instance, are larger than most big corporations and many of the leaders get paid out millions of dollars in bonuses every year. Read the first line of this article: https://news.vice.com/article/taxi-drivers-are-trying-to-take-down-uber https://news.vice.com/article/taxi-drivers-are-trying-to-tak... "Taxi unions in cities such as Boston, Denver, New York, and San Francisco are not pleased...." Sorry, but they are unionized and like every other industry where unions have control, you get inflated wages and higher prices. It nearly put the big 3 out of business during the downturn of 2008. Companies like Toyota didn't even bat an eye during that time because they could make changes with ease.
ChuckMcM 11y ago
Does anyone know how much of this has to do with the crashing value of Taxi Medallions ? One article on a company in the NYC area claimed they had loans where they used the Medallions as collateral and that the crashing value was putting the loan in danger of being called by the bank.
enahs-sf 11y ago
I will miss the transportation market taxi cabs provide. When the constraint is on supply-side (drivers) but the cost is constant (that is, given a sufficiently capable driver, your fare should be about the same) you're only limited by hailing a cab, which has become quite a bit easier now that everyone is using Lyft and Uber. Oh well. I get that the QoS is not as consistent with cabs, but I always found that part fun.
theworstshill 11y ago
Smith's invisible hand in action.
amorphid 11y ago
Speaking only for myself... The process of calling a toll free number for a SF cab sucks. Often get a busy signal. Most of the time they are slow to respond. Some times they never show up at all. Basically, I can't count on them to be timely. Uber (and formerly Sidecar) just shows up in a few minutes and takes me where I wanna go.
josephpmay 11y ago
Anyone else baffled by this line? >> “In reality, we have the best color scheme there is in the world, we’ve got a lot of loyal customers, we still get a high volume of calls to our color scheme on a daily basis,” he said.
randomdrake 11y ago
This is not surprising at all. Traveling around the world, cab drivers are often times some of my favorite people. I like the profession, generally finding cab drivers to be interesting and knowledgeable of local areas. In San Francisco, I try to take regular cabs when I can just to meet people and support the old profession and working class folks. Bay Area, about a week ago. It was dark, cold, and raining around 5:30pm. Myself and the wife, who is at term and therefore obviously pregnant, got off at the train station and attempted to take a cab to alleviate the few minute wait in the rain for a Lyft or Uber. I didn't have any cash. I know by now that you have to ask if they take credit card ahead of time; fine. Me: "Hi, do you take credit card?" Them: "No, no credit card. It's broken." Me: "You've got stickers on your window that say you take them?" Them: "Well, how far are you going?" Me: "No thanks, I'll try the next one. Me: "Hello, do you take credit card?" Them: "Maybe. Where are you going? Minimum 15 dollar." I know that it's about 12 dollars to my house. I tell him where we're going, and he just shakes his head. Me: "Fine, screw it. I'll just get a Lyft." I pulled out my phone, standing in front of a line of Taxis, and got a Lyft. About 6-8 minutes later, they picked us up, and took us on our way. An entire line of cab drivers, my pregnant wife and I standing there in the rain and cold, and not a single one of them trying to actually take the fare. During the 15 minutes or so of this interaction, and us waiting for Lyft, not a single cab was taken by the very strong flow of people leaving the train station at rush hour. Lots of pickups from friends and family. Plenty of Uber cars. Pink mustaches in quite a few windshields. It was like something out of a movie. An entire line of real people, sitting there in their cars, often complaining about a lack of business, or how times have changed, or how insurance is X, or Uber is Y. Not a single one with enough gumption to step up to the plate, smile, and say: "Where to mister?"
- xxpor 11y ago
  Why do you let them tell you they don't take cards? From a quick googling, it seems like taxis in SF must take cards. If they drive me somewhere and the machine's broken, that's not my problem.
  - BHSPitMonkey 11y ago
    They only have to take your card if they want to get paid. They're not required to pick you up in the first place.
facetube 11y ago
The first and last yellow cab I took in San Francisco: the driver didn't know where the Presidio was, took us somewhere completely different, and then argued with us for a solid five minutes insisting we'd given him the wrong address (we hadn't, multiple times, with the zip code, explaining that it was near the Golden Gate bridge). The driver had a GPS unit in the car. I couldn't even get angry; brain was already saturated with amazement.
justinzollars 11y ago
Just before Uber in 2009 I was once left stranded at Jerry Garcia Amphitheater because it was "out of the way" for the cab company. I had to walk several miles through the hills to get home. Uber solved a huge problem for us.
mikeash 11y ago
"In reality, we have the best color scheme there is in the world, we’ve got a lot of loyal customers, we still get a high volume of calls to our color scheme on a daily basis" Does "color scheme" have a special meaning in the taxi business, or is this guy actually bragging about how their cars are painted?
- patio11 11y ago
  Yellow cabs are a multi-organization multi-city brand; so are e.g. checkered cabs. It's like Coke vs. Pepsi without the central corporate parent. Not inconceivable an independent bottler would prefer bottling for Coke rather than Pepsi right?
- simoncion 11y ago
  AIUI, -in SF, at least- each taxi cab company has its own unique color scheme. I guess Yellow Cab's is Yellow on Yellow. Others are Red on Black, or Blue on White, or whatever. So yeah, I'm fairly certain that the guy is bragging about how lucky his company was to be able to have the "traditional" taxi color scheme... it's more or less as silly as it sounds.
- kasey_junk 11y ago
  I've been told by a couple of different foreign nationals that guide books in their country recommend only taking "yellow" cabs to distinguish between non-licensed cabs. I have no idea if that phenomenon is worth anything though.
flippyhead 11y ago
I'm currently programmer nomad-ing in Uruguay and have been delighted with Easy Taxi. I don't know if all the cabs use it, but tons of them do and it works just as well as Lyft/Uber did for me in Seattle. Real-time updates of location, ratings, instant confirmation of fare acceptance... I say I want a cab and pretty much get one within 5 minutes no matter where or when I am. It's all the same yellow and black taxies but everyone has a cell phone mounted to their dash and.. it just works. I'll never ever understand why taxies in the US haven't done this. Had they, I probably wouldn't have switched _exclusively_ to using Lyft.
- lucaspiller 11y ago
  It's the same here in Lithuania, when Uber started to become popular a few years ago the taxi companies joined forces and launched their own apps (there are two main competing apps). I don't understand how US taxi companies have been so oblivious to this, given each one in major cities probably has more cabs than the whole country does here :D Uber finally launched a couple of months ago, but it's more expensive and doesn't have as many cars.
msie 11y ago
I've had mostly good taxis, some okay taxis and a lot of taxis that just didn't show up. Luckily I haven't had any bad taxi rides.
beedogs 11y ago
Have fun paying your "surge pricing" every weekend, San Franciscans. Chumps.
iamleppert 11y ago
Good riddance. Almost all of my Yellow Cab experiences have been awful.
habosa 11y ago
There are a lot of comments in this thread about the problems Uber solves. I'd like to pose a different question: which of those problems is not solved by Flywheel? For those who don't know, Flywheel is an app that lets you call a regular taxi cab with an Uber-like dispatch system. You watch the cab arrive with GPS and pay on your phone. It is some small fixed cost over the cost of a cab, no surging obviously. And you can put in your destination for the driver to navigate to via GPS, just like Uber.
- RickS 11y ago
  I think there's an element of principle to it. I certainly feel that way, and it appears the majority does as well. App GPS, app payment, star ratings... these are not new things. And yet the taxi industry couldn't be bothered to better itself until a higher quality service came through and gutted their profits. Consumers suffered some universally abhorrent treatment for years because taxis flat out don't give a fuck. And now, what.. all is expected to be forgiven because they're suddenly in the app store? They made this bed. They can lie in it.
  - habosa 11y ago
    That is the biggest point in favor of Uber, their threat made some taxi operators attempt to get their act together. I think that in a few years Uber will learn to give as few fucks (to borrow your phrasing) as taxi companies do today. Most of the current taxi drivers will become Uber drivers, Uber will have too many riders to do reasonable customer service, and there will be no incentive to go the extra mile for customers when there is no entrenched competition to outshine. The only reason I bother playing the devil's advocate in pro-Uber threads is because I don't like how they got here. They used VC money to barrel into ever major city and actively ignore the law. It's just one more symptom of the problem that having a billion dollars in America makes you above the law.
- fancyketchup 11y ago
  Sounds like it does most of what ride-share services do. Does Flywheel allow you to rate individual drivers/cars (and prevent being matched to creepy drivers or dirty cars on future rides)? I think that's actually one of the biggest value-adds of Uber/Lyft/Sidecar--direct feedback about drivers which tends to retain good drivers and reject bad ones.
lnanek2 11y ago
Good to hear. The few times I've called a cab in SF it never showed up. I've heard there is no penalty to them if they just pick someone else up instead on the way. So glad their company got the penalty for poor service in the end.
dbg31415 11y ago
Please please please let Austin's Taxi companies be the next to fall. Between shitty customer service, not showing up on time (or at all), and having drivers that will always try and take the slowest shittiest way to get anywhere to inflate the bill... I can't wait for them to go out of business. Spot the cab driver with a passenger... he'll drive 50 MPH in a 65 zone. Spot the cab driver without one... he does 90. So not only do they rip the passenger off, but they fuck up traffic for everyone behind them. Fucking cunts, they all deserve to be put out of business. Can not count the number of times I called a cab to the airport in the last 10 years, only to have the cab not show up on time leaving me in a spot where I'd have to beg a neighbor to take me to the airport, or drive myself and pay for week-long parking my company didn't cover when I had to take a business trip. Uber and Lyft... they may not be perfect, but they're infinitely better than taxis. Infuckingfinetly better. Taxis going out of business... 1) natural selection, and 2) good riddance.

204 points by coloneltcb 11y ago

It will be interesting if there is room for traditional cab companies after the market stabilizes. Uber and Lyft have been effectively subsidizing fares at the same time as providing superior service. It is not really clear what level of service the market demands without loads of venture capital helping to subsidize it.

nodesocket 11y ago

This was bound to happen, just a matter of time. Uber and Lyft are able to operate at much lower costs, and additionally have basically an unlimited supply of capital (VC investment). Traditional businesses have no chance of being competitive in this market.

kzhahou 11y ago
What makes U&L lower cost? Just the lack of driver health insurance and benefits?
- mahouse 11y ago
  If you think that's not much, think of the difference in taxes between the US and northern Europe.
  - toomuchtodo 11y ago
    So your business is workable because it evades taxes? What is this, Russia?
    - mahouse 11y ago
      I'm not saying it's Uber's case, but yes, in many cases, some businesses only exist because they evade taxes. That's the reason lobbies exist.
      - toomuchtodo 11y ago
        My argument is that we shouldn't allow businesses to exist that flout the law, taxes or otherwise.
        Grishnakh 11y ago
        So you think we should shut down the oil companies and agriculture companies and all the large banks?
        toomuchtodo 11y ago
        > oil companies Yes. They've known about their products causing climate change for decades. They should be liquidated. > agriculture companies Some, not all. > and all the large banks Only the ones that are "too big to fail" or those engaged in illegal activities.
        Grishnakh 11y ago
        Sounds all good to me, but good luck getting Congress to go along with that.
        saryant 11y ago
        So... who provides the energy that makes our lifestyle possible is this magical world of yours?
        toomuchtodo 11y ago
        Oh come on. Enough sunlight hits the earth in an hour to power worldwide consumption for a year. It takes an infinitesimal amount of land if you were going to use solar alone [1]. There is enough wind power potential in the US midwest, from North Dakota to Texas, to power the entire US 4x over [2]. There's enough generation capacity to move 77% of light vehicles in the US over to electric immediately. There's plenty of energy to go around. Fun fact: The latest budget bill that passed at the end of 2015 had one of the largest subsidies (ITC production tax credit) for solar and wind generation installation ever. [1] http://cleantechnica.com/files/2015/05/Land-art-AreaRequired1000.jpg http://cleantechnica.com/files/2015/05/Land-art-AreaRequired... [2] http://www.energy.gov/sites/prod/files/2015/05/f22/Enabling-Wind-Power-Nationwide_18MAY2015_FINAL.pdf http://www.energy.gov/sites/prod/files/2015/05/f22/Enabling-... (page 6)
    - theworstshill 11y ago
      Jokes on you, taxes in Russia are a flat 10% last I heard. Edit: why do you think its that small? Yes, because noone paid it when it was larger.
- thephyber 11y ago
  Taxi companies don't necessarily hire employees. The whole medallion controversy in NYC was that the market value of the medallion had outpaced the rent the taxi owner could charge the driver for that shift. * U&L don't own the cars, so they don't need to enforce a price floor to stay n business. If the drivers in one city saturate the market and driving becomes unprofitable, U&L lose some rev-share, but no capital investments. * Taxi companies are required to disclose their costs on the outside of their car (in most jurisdictions), meaning it can't change often like U&L's dynamic pricing and it also acts as a price floor where U&L don't have one. * Also, U&L can hire more drivers than the fixed number of taxis in any jurisdiction defined by the government, thus moving the city higher on the supply curve and driving down the cost below what taxi companies need to cover their expenses.
- Animats 11y ago
  Basically, yes. Yellow Cab is in trouble because they lost some liability lawsuits.[1] In one, they only had $1M in coverage and had to pay out $8M. [1] http://www.sfgate.com/business/article/SF-jury-finds-Yellow-Cab-liable-for-8M-accident-6352539.php http://www.sfgate.com/business/article/SF-jury-finds-Yellow-...
- fweespeech 11y ago
  Lack of driver health insurance, lack of benefits, lack of liability from crashes, reduced compliance costs via skirting local regulations [e.g. Background checks for Uber/Lyft are cheaper than the more thorough checks in some municipalities] http://www.texastribune.org/2015/10/07/background-checks-center-city-fights-uber/ http://www.texastribune.org/2015/10/07/background-checks-cen... http://www.cnet.com/news/ubers-background-checks-dont-catch-criminals-says-houston/ http://www.cnet.com/news/ubers-background-checks-dont-catch-...
  - Grishnakh 11y ago
    Background checks are a canard. How do the cab companies check the background of someone from Uzbekistan? They can't, they can only go back as far as that person has been in the country, which isn't very long judging by their mastery of English. U/L do carry insurance for their drivers when they're driving a passenger, and it's probably more than the regular cab companies carry (which is why SF Yellow cab is going bankrupt: they weren't insured for enough for one of their incompetent drivers, according to the article). Also, U/L have deeper pockets than any local cab company/coop, so civil suits will net higher payouts too if it came to that. As for health insurance, from what I've read a lot of cab drivers aren't full-time employees either, so they also don't get health insurance, or benefits.
    - fweespeech 11y ago
      > Background checks are a canard. How do the cab companies check the background of someone from Uzbekistan? In other words, "Hey, Uber hires known felons and its okay because I can think of a scenario where background checks fail." By that logic, stop visiting the doctor, using seat belts, or any safety device known to man because it can fail for some non-0 fraction of the time. > U/L do carry insurance for their drivers when they're driving a passenger, and it's probably more than the regular cab companies carry (which is why SF Yellow cab is going bankrupt: they weren't insured for enough for one of their incompetent drivers, according to the article) http://www.propertycasualty360.com/2015/02/09/uh-ohuber-has-some-coverage-issues http://www.propertycasualty360.com/2015/02/09/uh-ohuber-has-... http://www.buzzfeed.com/kenbensinger/ubers-yawning-insurance-gap#.edxlxR64w http://www.buzzfeed.com/kenbensinger/ubers-yawning-insurance... http://www.forbes.com/sites/harrycampbell/2015/10/07/why-are-so-many-las-vegas-uber-drivers-lying-to-their-insurance-companies/2/ http://www.forbes.com/sites/harrycampbell/2015/10/07/why-are... > Drivers can answer no and effectively lie to their insurance company (while also committing insurance fraud) but still receive coverage, or they can say yes and they would be immediately denied coverage. Additionally, they could even be dropped from their policy for disclosing that they are a rideshare driver. > Since it’s not really in Uber’s best interest to disclose the lack of collision coverage during Period 1, many drivers don’t discover that they’re not covered until it’s too late. I’ve been researching rideshare insurance options in Nevada since Uber went live and spoken with hundreds of Uber drivers yet we haven’t been able to find a single insurance carrier willing to insure rideshare drivers. Some carriers offer a commercial policy but the cost is prohibitive at $3,000-$5,000 a year. > Meanwhile, risk-averse insurance companies have been excruciatingly slow to adapt to this new and innovative form of transportation. I maintain an up to date list of insurance options by state for Uber drivers on my site and you’ll notice that Nevada is not currently on that list. There literally isn’t a single option for drivers which unfortunately is somewhat typical. A majority of states in the US still don’t offer a rideshare friendly personal insurance or hybrid policy for Uber drivers which means a whole lot of drivers are forced to lie to their insurance carriers or find a different line of work. There are some pretty significant gaps in that coverage that shift the burden to drivers, depending on the state. In fact there is an entire business built around the fact there are massive holes in that policy: https://www.metromile.com/uber/ https://www.metromile.com/uber/ > Traditional auto insurance policies may not provide clear coverage for drivers who participate in ridesharing programs. The partnership between Uber and Metromile means you’re insured 24/7, whether you’re using your car for personal use or driving with Uber. Now, Metromile offers complete clarity to Uber driver partners. The difference with Uber is the driver gets fucked instead of the Taxi/Uber company. > As for health insurance, from what I've read a lot of cab drivers aren't full-time employees either, so they also don't get health insurance, or benefits. I'm not even going to bother with this one. I've pointed out enough holes already.
- gkoberger 11y ago
  There's a lot of snarky answers, but some things off the top of my head why Uber can be cheaper: * More efficient (less down-time driving around) * People use their own cars (no need to buy/maintain taxis) * Less overhead (no need for managers, dispatchers, etc) * No taxi medallions * More popular, so more rides * Subsidized by VC money (Okay, kinda snarky, but legitimate) The last point about subsidization sounds bad, but their goal is (likely) to just get enough market share that they've already won by the time self-driving cars come out (and can cut costs significantly then).
  - artursapek 11y ago
    I am really looking forward to self-driving cabs. When I see what the job does to people I usually feel bad for them. It sucks getting in a cab whose driver is a jerk, but I honestly can't expect them to be happy with a job like that. People shouldn't have to be doing that job.
- Tiktaalik 11y ago
  I'm not up to date with the state of SF transportation rules and U&L. Are U&L still ignoring rules designed to provide access to those with disabilities? This article is pretty old at this point (2014) and I don't know if the situation has changed for the better. http://www.sfgate.com/news/article/As-Uber-Lyft-Sidecar-grow-so-do-concerns-of-5240889.php http://www.sfgate.com/news/article/As-Uber-Lyft-Sidecar-grow... Ignoring the people with disabilities, as they are more expensive to service is one (problematic) way to lower costs.
  - fancyketchup 11y ago
    > Are U&L still ignoring rules designed to provide access to those with disabilities? In my city one of the options (besides SUV, black car, etc) is for persons with disabilities. The app seems to have some options to switch between requesting a driver with a wheelchair-compatible car and the city's own paratransit service. I've never used it myself, so I can't comment on the implementation.
toomanybeersies 11y ago
It is a bit concerning that Uber is hemorrhaging money right now, being able to cost themselves lower than conventional cabs because they have such a massive amount of capital. Outpricing your competition by making a loss/no profit is a nasty tactic, especially when your competition can't compete at a loss (for whatever reasons) and then goes out of business, only for the surviving business to then rise their prices to whatever point they want, given that there is now no competition.
- criddell 11y ago
  > being able to cost themselves lower than conventional cabs because they have such a massive amount of capital Is Uber less expensive than regular cabs? My experience in Uber so far has been uniformly excellent and my experience in regular cabs has ranged between ok and dismal. I think I would probably be willing to pay around a 25% premium to use Uber over a regular cab. The traditional taxi operators haven't needed to care about customer experience for so long, that I'm not sure they can change.
  - mikeash 11y ago
    UberX typically is cheaper than a cab. The price is the same or lower, and you don't tip. If you go for a black car it's a bit pricier.
  - toomanybeersies 11y ago
    UberX is the only Uber available in NZ, and without surge pricing it's about 25% cheaper than a normal cab, and almost half the price for me to get to the airport, due to outrageous taxi fees at the airport. Uber in NZ also operates much closer to a Taxi too, drivers must have a P endorsement, which allows you to commercially charge passengers, and requires you to pass a test and have a govt run background check, and have a clearly visible govt issued ID card while carrying passengers. Most of the drivers for uber are therefore former taxi drivers, who drive for uber because it pays better and gives better flexibility.

Grishnakh 11y ago

Too bad, so sad... If they hadn't allowed their service to get so horrible, with nasty old cars, drivers that don't speak English and drive around in circles to increase fares, drivers claiming their card readers are "broken" so you have to pay cash, taking an hour to show up when called, passing by black people, etc., then this wouldn't be happening. From the article: "Cab drivers, on the other hand, maintain that they undergo more rigorous criminal checks, enjoy more robust insurance, and generally have better knowledge of city streets." Who cares about knowledge of city streets? Haven't they heard of Google Maps and Waze and GPS? This just shows how out-of-touch and behind-the-times the cab industry is. The insurance is a canard, as Uber insures their drivers for more than the cab companies (the problem with Uber is what happens when you don't have a paying rider). And criminal background checks are useless if you haven't been in the country very long; how are they going to check your background in Pakistan? Also, the Uber/Lyft reputation systems are far more valuable anyway, plus Uber/Lyft keep detailed records of all their drivers' movements when they have riders, so it's pretty hard for them to get away with anything; cabs aren't guaranteed to have any of that oversight. And apparently driving for Uber isn't that bad, since the cab companies are now complaining that all the good drivers are switching to Uber/Lyft, leaving them with crappy drivers who earn them huge lawsuits for accidents they cause.

Grishnakh 11y ago
Wow, this is weird, I'm being modded way up. I was expecting the reverse: on another, much older "tech news" site, any time the Uber/Lyft vs. cabs debate comes up, there's a very strong contingent of people there who absolutely hate Uber/Lyft and go on and on about how wonderful cabs are.
- santaclaus 11y ago
  The Ars Technica readership seem to loathe Uber.
  - Grishnakh 11y ago
    Actually, I was talking about Slashdot.

kw71 11y ago

What's it like to ride in a SF taxi? I'm not a frequent taxi user, but last time I rode in an NYC cab, the partition made me feel like I was going to jail and the advertising screen made me feel like I was riding public transportation. No doubt the normal private cars are more comfortable.

Hilyin 11y ago
This, a million times this. Also, taxi drivers could care less about your ride experience. No way to rate them and cause any change, so they just treat everyone like crap.
artursapek 11y ago
The ad screen almost feels inhumane. There's no way to turn it off or even dim it. After a long flight, having that thing in your face can be really unpleasant. It's my biggest gripe with NYC cabs. It's just too 1984 for my taste.
- marrone12 11y ago
  You definitely can turn off half the ad screens, and the other half you can at least turn down the volume
- gergles 11y ago
  What, of course there is. There's a red button in the lower-right hand corner you can hit to turn it off in most cabs; granted, there are some where you cannot turn the screen 'off' but you can turn off the display of advertising on it (and it just then says "Touch here to resume").
  - artursapek 11y ago
    That "off button" doesn't turn it off, it makes it goes into a silent slideshow mode showing you more ads with an equally bright screen. Point is you can't win against the ad machine.

deleted 11y ago

[deleted]

jayess 11y ago

I love the smell of creative destruction in the morning.

bobby_9x 11y ago

Uber/Lyft are very interesting. The main reason cabs are so terrible is because the unions have a complete stranglehold on the industry, which means pretty much no advancement in technology and monopolistic pricing. They both are basically going against everything the unions stand for by not having regular wages or benefits. Edit: Admitting you're wrong is not something most people here on HN can do. Instead, they downvote.

Grishnakh 11y ago
Um, I thought the reason cabs are so terrible is not because of unionization, but because it's a cartel, and it's given that power by the government because of the issuance of licenses (called "medallions") which ensure a limited supply of cabs, artificially restricting competition.
- bobby_9x 11y ago
  "but because it's a cartel, and it's given that power by the government because of the issuance of licenses (called "medallions") which ensure a limited supply of cabs, artificially restricting competition." Right, the unions. It's not a corporation that is artificially restriction competition, it's the unions. These unions have deals with the government. The same thing happens in the auto industry.
  - Grishnakh 11y ago
    No, that's not a union, that's a cartel. A union is an organization of labor, not company owners. And it's the cab owners who have the deal with the government.
    - bobby_9x 11y ago
      You are just mincing words to make it seem like unions aren't the bad guy here. The auto unions, for instance, are larger than most big corporations and many of the leaders get paid out millions of dollars in bonuses every year. Read the first line of this article: https://news.vice.com/article/taxi-drivers-are-trying-to-take-down-uber https://news.vice.com/article/taxi-drivers-are-trying-to-tak... "Taxi unions in cities such as Boston, Denver, New York, and San Francisco are not pleased...." Sorry, but they are unionized and like every other industry where unions have control, you get inflated wages and higher prices. It nearly put the big 3 out of business during the downturn of 2008. Companies like Toyota didn't even bat an eye during that time because they could make changes with ease.

ChuckMcM 11y ago

Does anyone know how much of this has to do with the crashing value of Taxi Medallions ? One article on a company in the NYC area claimed they had loans where they used the Medallions as collateral and that the crashing value was putting the loan in danger of being called by the bank.

enahs-sf 11y ago

I will miss the transportation market taxi cabs provide. When the constraint is on supply-side (drivers) but the cost is constant (that is, given a sufficiently capable driver, your fare should be about the same) you're only limited by hailing a cab, which has become quite a bit easier now that everyone is using Lyft and Uber. Oh well. I get that the QoS is not as consistent with cabs, but I always found that part fun.

theworstshill 11y ago

Smith's invisible hand in action.

amorphid 11y ago

Speaking only for myself... The process of calling a toll free number for a SF cab sucks. Often get a busy signal. Most of the time they are slow to respond. Some times they never show up at all. Basically, I can't count on them to be timely. Uber (and formerly Sidecar) just shows up in a few minutes and takes me where I wanna go.

josephpmay 11y ago

Anyone else baffled by this line? >> “In reality, we have the best color scheme there is in the world, we’ve got a lot of loyal customers, we still get a high volume of calls to our color scheme on a daily basis,” he said.

randomdrake 11y ago

This is not surprising at all. Traveling around the world, cab drivers are often times some of my favorite people. I like the profession, generally finding cab drivers to be interesting and knowledgeable of local areas. In San Francisco, I try to take regular cabs when I can just to meet people and support the old profession and working class folks. Bay Area, about a week ago. It was dark, cold, and raining around 5:30pm. Myself and the wife, who is at term and therefore obviously pregnant, got off at the train station and attempted to take a cab to alleviate the few minute wait in the rain for a Lyft or Uber. I didn't have any cash. I know by now that you have to ask if they take credit card ahead of time; fine. Me: "Hi, do you take credit card?" Them: "No, no credit card. It's broken." Me: "You've got stickers on your window that say you take them?" Them: "Well, how far are you going?" Me: "No thanks, I'll try the next one. Me: "Hello, do you take credit card?" Them: "Maybe. Where are you going? Minimum 15 dollar." I know that it's about 12 dollars to my house. I tell him where we're going, and he just shakes his head. Me: "Fine, screw it. I'll just get a Lyft." I pulled out my phone, standing in front of a line of Taxis, and got a Lyft. About 6-8 minutes later, they picked us up, and took us on our way. An entire line of cab drivers, my pregnant wife and I standing there in the rain and cold, and not a single one of them trying to actually take the fare. During the 15 minutes or so of this interaction, and us waiting for Lyft, not a single cab was taken by the very strong flow of people leaving the train station at rush hour. Lots of pickups from friends and family. Plenty of Uber cars. Pink mustaches in quite a few windshields. It was like something out of a movie. An entire line of real people, sitting there in their cars, often complaining about a lack of business, or how times have changed, or how insurance is X, or Uber is Y. Not a single one with enough gumption to step up to the plate, smile, and say: "Where to mister?"

xxpor 11y ago
Why do you let them tell you they don't take cards? From a quick googling, it seems like taxis in SF must take cards. If they drive me somewhere and the machine's broken, that's not my problem.
- BHSPitMonkey 11y ago
  They only have to take your card if they want to get paid. They're not required to pick you up in the first place.

facetube 11y ago

The first and last yellow cab I took in San Francisco: the driver didn't know where the Presidio was, took us somewhere completely different, and then argued with us for a solid five minutes insisting we'd given him the wrong address (we hadn't, multiple times, with the zip code, explaining that it was near the Golden Gate bridge). The driver had a GPS unit in the car. I couldn't even get angry; brain was already saturated with amazement.

justinzollars 11y ago

Just before Uber in 2009 I was once left stranded at Jerry Garcia Amphitheater because it was "out of the way" for the cab company. I had to walk several miles through the hills to get home. Uber solved a huge problem for us.

mikeash 11y ago

"In reality, we have the best color scheme there is in the world, we’ve got a lot of loyal customers, we still get a high volume of calls to our color scheme on a daily basis" Does "color scheme" have a special meaning in the taxi business, or is this guy actually bragging about how their cars are painted?

patio11 11y ago
Yellow cabs are a multi-organization multi-city brand; so are e.g. checkered cabs. It's like Coke vs. Pepsi without the central corporate parent. Not inconceivable an independent bottler would prefer bottling for Coke rather than Pepsi right?
simoncion 11y ago
AIUI, -in SF, at least- each taxi cab company has its own unique color scheme. I guess Yellow Cab's is Yellow on Yellow. Others are Red on Black, or Blue on White, or whatever. So yeah, I'm fairly certain that the guy is bragging about how lucky his company was to be able to have the "traditional" taxi color scheme... it's more or less as silly as it sounds.
kasey_junk 11y ago
I've been told by a couple of different foreign nationals that guide books in their country recommend only taking "yellow" cabs to distinguish between non-licensed cabs. I have no idea if that phenomenon is worth anything though.

flippyhead 11y ago

I'm currently programmer nomad-ing in Uruguay and have been delighted with Easy Taxi. I don't know if all the cabs use it, but tons of them do and it works just as well as Lyft/Uber did for me in Seattle. Real-time updates of location, ratings, instant confirmation of fare acceptance... I say I want a cab and pretty much get one within 5 minutes no matter where or when I am. It's all the same yellow and black taxies but everyone has a cell phone mounted to their dash and.. it just works. I'll never ever understand why taxies in the US haven't done this. Had they, I probably wouldn't have switched _exclusively_ to using Lyft.

lucaspiller 11y ago
It's the same here in Lithuania, when Uber started to become popular a few years ago the taxi companies joined forces and launched their own apps (there are two main competing apps). I don't understand how US taxi companies have been so oblivious to this, given each one in major cities probably has more cabs than the whole country does here :D Uber finally launched a couple of months ago, but it's more expensive and doesn't have as many cars.

msie 11y ago

I've had mostly good taxis, some okay taxis and a lot of taxis that just didn't show up. Luckily I haven't had any bad taxi rides.

beedogs 11y ago

Have fun paying your "surge pricing" every weekend, San Franciscans. Chumps.

iamleppert 11y ago

Good riddance. Almost all of my Yellow Cab experiences have been awful.

habosa 11y ago

There are a lot of comments in this thread about the problems Uber solves. I'd like to pose a different question: which of those problems is not solved by Flywheel? For those who don't know, Flywheel is an app that lets you call a regular taxi cab with an Uber-like dispatch system. You watch the cab arrive with GPS and pay on your phone. It is some small fixed cost over the cost of a cab, no surging obviously. And you can put in your destination for the driver to navigate to via GPS, just like Uber.

RickS 11y ago
I think there's an element of principle to it. I certainly feel that way, and it appears the majority does as well. App GPS, app payment, star ratings... these are not new things. And yet the taxi industry couldn't be bothered to better itself until a higher quality service came through and gutted their profits. Consumers suffered some universally abhorrent treatment for years because taxis flat out don't give a fuck. And now, what.. all is expected to be forgiven because they're suddenly in the app store? They made this bed. They can lie in it.
- habosa 11y ago
  That is the biggest point in favor of Uber, their threat made some taxi operators attempt to get their act together. I think that in a few years Uber will learn to give as few fucks (to borrow your phrasing) as taxi companies do today. Most of the current taxi drivers will become Uber drivers, Uber will have too many riders to do reasonable customer service, and there will be no incentive to go the extra mile for customers when there is no entrenched competition to outshine. The only reason I bother playing the devil's advocate in pro-Uber threads is because I don't like how they got here. They used VC money to barrel into ever major city and actively ignore the law. It's just one more symptom of the problem that having a billion dollars in America makes you above the law.
fancyketchup 11y ago
Sounds like it does most of what ride-share services do. Does Flywheel allow you to rate individual drivers/cars (and prevent being matched to creepy drivers or dirty cars on future rides)? I think that's actually one of the biggest value-adds of Uber/Lyft/Sidecar--direct feedback about drivers which tends to retain good drivers and reject bad ones.

lnanek2 11y ago

Good to hear. The few times I've called a cab in SF it never showed up. I've heard there is no penalty to them if they just pick someone else up instead on the way. So glad their company got the penalty for poor service in the end.

dbg31415 11y ago

Please please please let Austin's Taxi companies be the next to fall. Between shitty customer service, not showing up on time (or at all), and having drivers that will always try and take the slowest shittiest way to get anywhere to inflate the bill... I can't wait for them to go out of business. Spot the cab driver with a passenger... he'll drive 50 MPH in a 65 zone. Spot the cab driver without one... he does 90. So not only do they rip the passenger off, but they fuck up traffic for everyone behind them. Fucking cunts, they all deserve to be put out of business. Can not count the number of times I called a cab to the airport in the last 10 years, only to have the cab not show up on time leaving me in a spot where I'd have to beg a neighbor to take me to the airport, or drive myself and pay for week-long parking my company didn't cover when I had to take a business trip. Uber and Lyft... they may not be perfect, but they're infinitely better than taxis. Infuckingfinetly better. Taxis going out of business... 1) natural selection, and 2) good riddance.