They could still win on user experience. Compared to your basic Yellow Cab, it's easier to call one, there's less hassle over payments, and the cars are nicer.

They could still win on user experience. Compared to your basic Yellow Cab, it's easier to call one, there's less hassle over payments, and the cars are nicer. And if you're at an odd location, "talk to the driver" directly works a lot better than trying to go through dispatch. None of these is hugely innovative --- but Zappo's isn't doing anything hugely innovative either, and competing on service has still served them pretty well. (BTW, Uber had problems with taxi regulators even in San Francisco. Not to say that it wouldn't be a problem elsewhere, but they do have experience with it.)