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Death of the taxi medallion: SF cab company ponders major change
- kelukelugames 12y agoTaxis are going the way of video rental stores. I wonder what is going next.
- yazaddaruvala 12y agoHotels?.. Travel agencies?.. Car dealerships? There are too many options to know which one is next.
- sabbatic13 12y agoPlease let it be car dealerships and mattress salespersons. (crosses fingers)
- InclinedPlane 12y agoThe big one is going to be schools. They won't die out, but they will be substantially altered and not as dominant as they are today, and that process will take much longer than the uber vs. taxi dynamic will take to play out. So much of modern education is just read, regurgitate, test, even much of a typical undergraduate education falls in that bucket. That sort of education is prime for disruption via interactive educational apps, but the genre hasn't hit it's inflection point moment yet. Nevertheless, sometime in the next 10 to 20 years or so there will be a breakthrough in educational software. Someone will put the pieces together and start making stuff that is universally considered to be excellent, and they will start making a crap ton of money which will fuel a gold rush into making apps using the same ideas. The rest will be history.
- dang 12y agoUrl changed from http://pando.com/2014/08/04/san-francisco-cab-company-admits-ridesharing-defeat-threatens-to-convert-to-limo-service/ http://pando.com/2014/08/04/san-francisco-cab-company-admits..., which points to this.
- marvin 12y agoHas the market value of taxi medallions fallen after the advent of Uber and Lyft? I think there is a big risk that this way of organizing things is about to go away, which will leave taxi medallion owners with a huge loss.
- LanceJones 12y agohttp://www.washingtonpost.com/blogs/wonkblog/wp/2014/06/20/taxi-medallions-have-been-the-best-investment-in-america-for-years-now-uber-may-be-changing-that/ http://www.washingtonpost.com/blogs/wonkblog/wp/2014/06/20/t...
- trhway 12y agointeresting that right before (a year or two) Uber/Lyft/etc...'s time the prices of medallions hit something like $200K/$600K in SF/NY and there were stories about that in the news. Speaking about dialectics - top blossom of anything carries its undoing with/inside it.
- jonknee 12y agoThey have cost a fortune for a long time, Uber was born more out of the frustration of the ability to actually get a ride than whatever expenses were involved (though to be fair the reason it's hard to catch a cab in SF is because there are so few medallions which is why they're so pricey).
- xsmasher 12y agoI don't get it - he's giving up the ability to pick up riders at the cub, so where will his riders come from? Or does this loophole mean he CAN still pick up at the curb? I did not understand the whole TCP vs TNC business.
- jmckib 12y agoNot sure if this is full answer, but from the article: > Kim said he would do just fine because he has built a loyal customer base over the company's 80-year history and now receives an additional 2,000 hails daily through the hailing app Flywheel, which he hopes would adapt with him.
- xsmasher 12y agoThanks, my skimming was poor.
- ajju 12y agoxsmasher - good question :) presumably his rides could come from apps like Uber and Summon (disclosure: founder). I will say that as someone whose platform supports taxi, tncs and tcp cars there is a good chance this is just posturing by the person mentioned to achieve some other goals.
- njloof 12y agoHave you ever tried to hail a taxi in San Francisco? Can't be done anyway.
- meej 12y agoCan't get one dispatched, either. Uber had a blog post a few years ago [1] where they highlighted some findings from a SFMTA report on cab availability. The report found that 35% of dispatched cabs never showed up, except on weekends, when 72% never showed. [1] http://blog.uber.com/2011/04/11/uberdata-the-hidden-cost-of-cabs/ http://blog.uber.com/2011/04/11/uberdata-the-hidden-cost-of-...
- refurb 12y agoYou gotta give Hansu Kim credit, he's doing something different. A lot of companies would complain about Uber and die a slow death, but this guy is like "if they don't have to follow the rules, neither do I." It shows dash.
- deleted 12y ago[deleted]
- aetherson 12y agoWell, maybe. Nothing Kim is doing is going to directly lessen demand for medallions from the city. In San Francisco, to own a medallion, you must work 800 hours per year as a taxi driver (source: http://www.economicpolicyjournal.com/2012/07/is-san-francisco-taxi-medallion-good.html http://www.economicpolicyjournal.com/2012/07/is-san-francisc...). So Kim himself is not a medallion holder at all. (I gather that in other cities, this is a whole different story. But in SF, in theory as well as as far as I can tell in practice, medallion holders are themselves pretty committed cab drivers). What Kim owns are the cars and the infrastructure to support the cars, plus a dispatching system. He rents the medallions from their owners, who drive his cars and also allow their medallions to be used by other drivers in the DeSoto fleet when their owners are not using them (this is legal, to be clear). So in the short term, if Kim goes to a livery service, those medallion owners will by-and-large just rent their medallions to other taxi fleets in the city. The city won't lose any business directly from Kim, because he's not a customer of theirs anyway, and in the short term, as the article states, they have a waiting list of cabbies who want to buy medallions. Now, it is true that fleet owners all over the city are reporting that they are having more and more trouble getting their cars to full utilization, as the profits from being a taxi driver decrease. And presumably at some point if current trends continue, there won't be people willing to throw down $100k+ for a medallion, and the city will be hurt by that. But that was a preexisting trend to Kim's hypothetical movement to being a livery fleet, and if he does end up contributing to a lessened demand for medallions, he'll be a pretty small part of the overall trend, which is mainly a result of Uber and Lyft undercutting taxis. Source and disclaimer: I work for Flywheel, mentioned in the original article.
- SilasX 12y agoSummary: given the current regulatory conditions, you don't need a medallion if you just take bookings and do not get hailed from the street. "Taking a booking" is interpreted more broadly each day, so it includes summoning via apps. The owner, Kim, estimates that giving up the hailed fares in return for not paying for medallion rentals, would let him make more money and outcompete Uber. My comment: How long until someone converts a street hail into a booked ride by generating a record to make it look booked?
- simcop2387 12y agoI'm wondering if a "kiosk" in key locations on the street to grab a cab would be considered a booking or a street hail?
- mnutt 12y agoWhat if Uber just gave bar bouncers an app for hailing Ubers and shared a small cut with the bar? They'd just need a Square-like credit card swiper so that customers could pay for the rides individually.
- jdminhbg 12y agoYou could even integrate it into the bar tab, given a destination ahead of time.
- philip1209 12y agoI think the bigger market is hotels. Most major hotels already have a line of taxis outside.
- wastedhours 12y agoThis is kind of what we had here outside some nightclubs in the UK. There'd be a private hire company (bookable only), with a guy with a notepad and phone standing outside, he'd make the booking on the paper, ring the driver who was in the car next to him, bingo.
- clairity 12y agohas anyone tried http://www.ztrip.com/ http://www.ztrip.com/ ? it's a car hailing app developed by the company that owns a bunch of yellow cab companies. curious what people's thoughts/impressions of it are...
- blhack 12y agoInteresting name. Ztrip is also an incredibly popular remix artist/DJ. http://en.wikipedia.org/wiki/DJ_Z-Trip http://en.wikipedia.org/wiki/DJ_Z-Trip
- clairity 12y agonice! love old school hip hop dj'ing. still wondering if anyone has any opinions on the ride summoning app... maybe that's the answer, that no one uses it or has an opinion?
- dwd 12y agoThis won't work everywhere that has a medallion/license system. In Australia taxi licenses are regulated by each department of transport at the state level rather than city/municipal councils.
- jonknee 12y ago> "Uber isn't putting me out of business," Kim said, speaking hypothetically. "What Uber is making me do is retool -- and given the same rules, I'll beat them all day long." I appreciate his spirit, but I don't think he's fully estimating what it would involve to beat Uber at its game. He'll have to hire more drivers, have lower prices and still be up against a huge network effect wall. He seems jazzed with Flywheel, but they could stop sending him business tomorrow. One of my favorite parts about Uber is that it's in so many cities and has consistency (easy to see pricing, if there's a problem I know who to contact, etc). I'm never going to seek out DeSoto Cab Co on purpose. Basically, if the rules tilt towards the Uber model there is no reason for Kim to exist. He's a middle man in a business that is going the opposite direction.
- brandnewlow 12y agoRight, his thinking sounds a lot like what we heard from 2000-2008 or so from the newspaper industry. There's always some new app they think might turn the tide to conveniently mention in interviews, but at the end of the day these taxi companies are all on their way to a different, lower station in the marketplace.
- dragonwriter 12y ago> Basically, if the rules tilt towards the Uber model there is no reason for Kim to exist. He's a middle man in a business that is going the opposite direction. Not at all. Maybe though, he's a local middle-man in a business which is going toward global middle men. After all, Uber and Lyft are nothing if not middle men.
- ivanca 12y agoGoogle is just a middleman between you and webpages, Facebook is just a middleman between you and sharing your stuff. Everything is a middleman.
- ivanca 12y agoDownvote me all you want, but I just realized is even more true than I through at first, because the main revenue model of Google: Adsense/Adwords, is just a middle men between webmasters and advertisers; the only reason those two groups don't talk directly to each other is because they don't trust each other: - They don't know each other (lack of contact method) - They don't know how much they charge. - They don't know if they are trustworthy. - They don't know if they will maliciously overcharge or if they won't honor the contract. The completely exact middleman work that Uber does between drivers and passengers.
- omarrr 12y agoInteresting that DeSoto fails to mention why people seek out Uber. Kim seems to be focused on the medallions pricing structure completely ignoring user advantages such as ease of access through the app, reliable service, quality, etc, etc. If cab companies don't realize that new services beat them to the punch in many areas besides pricing they won't survive.
- Karunamon 12y agoThat is, unless, they have a government-granted monopoly that is tremendously unfriendly to disruption (i.e. regulatory capture)
- philip1209 12y agoI had a friend visit SF from NYC a couple weeks ago, and it blew my mind that he continued to use taxis instead of Ubers. Here, the decision seems clear-cut: calling a car with a phone is cheaper, faster, and more convenient. However, in NYC the streets are so saturated with taxis that waiting 5 to 10 minutes for an Uber instead of hailing a cab immediately seems absurd in most day-to-day situations.
- nvarsj 12y agoIt's pretty much the same in Chicago. You can hail a taxi almost immediately, but uber will take you 5-10 minutes. Can be useful though if you're in the outskirts of downtown.
- jgroszko 12y agoYep, I usually wind up using Uber to get from my apartment to the bars, and then there's enough cabs in the street outside the bars that it's faster to just hail one to get home.
- jinushaun 12y agoEver tried hailing a cab in NY? I got tired of wasting 15-30 minutes and prefer Uber instead.
- midas 12y agoI wonder if we'll see city medallion prices fall as drivers like this choose to not buy/rent medallions. Once that happens, the math might change such that it makes sense for him to keep the medallion. Sucks to be an investor who bet who bet against technology, ouch!
- cpwright 12y agoWhat I think might be more interesting for Mr. Kim is a hybrid model. He could start shedding medallions, and only use them for the airports or potentially a downtown core. The rest of his dispatched traffic could be in vehicles without a medallion. If most of the rides don't require the medallion, he could shed a significant cost. It sounds like with 204 of 2000 medallions, his decisions could personally have a fairly large effect on the marginal cost of the medallion (so he is paying less per medallion and for fewer medallions overall).