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Unless I'm missing something, the claim that becoming a taxi driver can become a well-salaried, middle-class job for a significant number of people is patent no

Unless I'm missing something, the claim that becoming a taxi driver can become a well-salaried, middle-class job for a significant number of people is patent nonsense. There is a reason that taxis look the way they do and are driven by the people who currently drive them, and regulations and licensing is only a small part of that. Uber might disrupt the taxi industry, maybe for the better, but once equilibrium is reached, incomes for drivers will have shifted to the right slightly, at best. It's hard for me to understand what the long play is for Uber's investors. Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think the investors are playing the short game.

deleted 12y ago
[deleted]
- free2rhyme214 12y ago
  Exactly.
JumpCrisscross 12y ago
> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think the investors are playing the short game. The long game is in capitalizing on (a) network effects and (b) the effects of changing technology on consumer behavior and market structure. Start with network effects. I live in New York. There are many transportation options. Like my tendency to default to a "top of my wallet" credit card, I tend to fire up Uber first. Other options are considered if Uber disappoints. It seldom does; Uber remains at the top of my "stack". This leads to me demanding several rides a day more from Uber than from its competitors. That, in turn, makes Uber marginally more attractive to drivers. The technology is easy to copy, but the ecosystem is not: network effects. Let's now consider the effects of changing technology on consumer behaviour. I can walk out of the aeroport in San Francisco, Paris, Austin or Abu Dhabi and have an Uber fueled and ready. Uber has been the driving factor behind me abandoning my driver's license, and with it expectations of ever owning a car. Here's another technology: driverless cars. Driverless cars reduce fleet costs and risks, and increase scalability on the supply-side (i.e. scale is no longer limited by driver availability and quality). If I were writing Uber's strategy, everything until the availability of fully automated automobiles would be geared towards establishing a strong opening for driverless cars. The tactical phase deploys in force only after the supply side of the scaling problem has been kicked away.
- jordanpg 12y ago
  But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor. If Uber pays more, taxi drivers will make rational decisions and become Uber drivers. Or Lyft drivers. Or whatever other competitor. If Uber has nicer cars or more efficient service, taxi services will adapt or go out of business. The drivers will go elsewhere, not change industries. And so on.
  - nemothekid 12y ago
    >But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor. This may be unrelated but I don't see how technology changes doesn't increase demand. If Uber is convenient/cheap enough that people forgo car ownership and decide to use Uber, doesn't that increase demand. Even if, in the long term, car ownership was cheaper, surely there are people who would rather spend $6 today than sign a loan for $6000.
  - JumpCrisscross 12y ago
    > But neither network effects nor technology will change overall number of people who need rides It did with me (granted, N=1). I reduced my own driving to zero and replaced it mostly with Uber. That isn't just a shift in my quantity of rides demanded, it's a shift in my demand curve. > driving cars is unskilled labor I would not have given up driving if the alternative were yellow cabs. New York taxi drivers are not knowledgeable about routes. Further, it is not uncommon for a trip to end with a debate over whether the credit card reader works. I will pay extra for even a minimally professional Uber driver over an unprofessional yellow taxi. The correlation between driver skill and rider experience is one of the problems Uber is running into when it considers scaling. That limitation is one that would be mitigated by driverless cars. > The drivers will go elsewhere, not find other jobs Network effects limit the viability of alternatives: there will be less demand on those platforms. As mentioned above, I do not believe most yellow taxi drivers would do well as Uber drivers–the supply is not fungible.
    - 12y ago
tptacek 12y ago
The long game as I understand it is the idea that Uber is building out a platform for real-time mobile logistics, and that transportation is the simplest and most broadly compelling example of something that would run on that platform.
ylem 12y ago
I have seen some taxi companies trying to add convenience--for example, I tried using TaxiMagic when I was in Denver for a conference. When it worked, it was great! I could see the car on the map as it arrived...But, the next time, I tried it during a mild snowstorm and the cab never arrived. So, I gave up on using them--but I imagine that with time, traditional cab companies will have more reliable apps. So, where will that leave Uber? I imagine that there must be a floor to what can be charged such that a driver is willing to work for the service and such that Uber can earn a profit. So, let's imagine that the market segments and that Uber wins say 80% of the market and the rest is left between competitors (I say imagine this, because as someone mentioned, there is a STRONG inertia effect. If I already have a taxi app with my information in it, then unless the price/service advantage is large, then I'm unlikely to change.). I imagine that one area that Uber will still maintain an advantage is that they will have a pretty good map in large cities of the traffic patterns (based on tracking of cabs). I imagine that that routing information could be valuable to delivery services in general. While large players like Google, Verizon, UPS, and such already have such data, there must be smaller players for whom it would be useful. Cities themselves might find it useful for traffic planning. Also, on a scarier note, Uber knows the route that its customers take. If it can link that data to demographics, then that might have some value for advertising along given routes, commercial real estate, etc.
bernardom 12y ago
> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think part of it is a bet that individual car ownership will decrease with technology, which I think is a great bet. Not to say that investing in Uber is the best way to bet on that.

deleted 12y ago

[deleted]

free2rhyme214 12y ago
Exactly.

JumpCrisscross 12y ago

> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think the investors are playing the short game. The long game is in capitalizing on (a) network effects and (b) the effects of changing technology on consumer behavior and market structure. Start with network effects. I live in New York. There are many transportation options. Like my tendency to default to a "top of my wallet" credit card, I tend to fire up Uber first. Other options are considered if Uber disappoints. It seldom does; Uber remains at the top of my "stack". This leads to me demanding several rides a day more from Uber than from its competitors. That, in turn, makes Uber marginally more attractive to drivers. The technology is easy to copy, but the ecosystem is not: network effects. Let's now consider the effects of changing technology on consumer behaviour. I can walk out of the aeroport in San Francisco, Paris, Austin or Abu Dhabi and have an Uber fueled and ready. Uber has been the driving factor behind me abandoning my driver's license, and with it expectations of ever owning a car. Here's another technology: driverless cars. Driverless cars reduce fleet costs and risks, and increase scalability on the supply-side (i.e. scale is no longer limited by driver availability and quality). If I were writing Uber's strategy, everything until the availability of fully automated automobiles would be geared towards establishing a strong opening for driverless cars. The tactical phase deploys in force only after the supply side of the scaling problem has been kicked away.

jordanpg 12y ago
But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor. If Uber pays more, taxi drivers will make rational decisions and become Uber drivers. Or Lyft drivers. Or whatever other competitor. If Uber has nicer cars or more efficient service, taxi services will adapt or go out of business. The drivers will go elsewhere, not change industries. And so on.
- nemothekid 12y ago
  >But neither network effects nor technology will change overall number of people who need rides (demand) and the fact that driving cars is unskilled labor. This may be unrelated but I don't see how technology changes doesn't increase demand. If Uber is convenient/cheap enough that people forgo car ownership and decide to use Uber, doesn't that increase demand. Even if, in the long term, car ownership was cheaper, surely there are people who would rather spend $6 today than sign a loan for $6000.
- JumpCrisscross 12y ago
  > But neither network effects nor technology will change overall number of people who need rides It did with me (granted, N=1). I reduced my own driving to zero and replaced it mostly with Uber. That isn't just a shift in my quantity of rides demanded, it's a shift in my demand curve. > driving cars is unskilled labor I would not have given up driving if the alternative were yellow cabs. New York taxi drivers are not knowledgeable about routes. Further, it is not uncommon for a trip to end with a debate over whether the credit card reader works. I will pay extra for even a minimally professional Uber driver over an unprofessional yellow taxi. The correlation between driver skill and rider experience is one of the problems Uber is running into when it considers scaling. That limitation is one that would be mitigated by driverless cars. > The drivers will go elsewhere, not find other jobs Network effects limit the viability of alternatives: there will be less demand on those platforms. As mentioned above, I do not believe most yellow taxi drivers would do well as Uber drivers–the supply is not fungible.
  - 12y ago

tptacek 12y ago

The long game as I understand it is the idea that Uber is building out a platform for real-time mobile logistics, and that transportation is the simplest and most broadly compelling example of something that would run on that platform.

ylem 12y ago

I have seen some taxi companies trying to add convenience--for example, I tried using TaxiMagic when I was in Denver for a conference. When it worked, it was great! I could see the car on the map as it arrived...But, the next time, I tried it during a mild snowstorm and the cab never arrived. So, I gave up on using them--but I imagine that with time, traditional cab companies will have more reliable apps. So, where will that leave Uber? I imagine that there must be a floor to what can be charged such that a driver is willing to work for the service and such that Uber can earn a profit. So, let's imagine that the market segments and that Uber wins say 80% of the market and the rest is left between competitors (I say imagine this, because as someone mentioned, there is a STRONG inertia effect. If I already have a taxi app with my information in it, then unless the price/service advantage is large, then I'm unlikely to change.). I imagine that one area that Uber will still maintain an advantage is that they will have a pretty good map in large cities of the traffic patterns (based on tracking of cabs). I imagine that that routing information could be valuable to delivery services in general. While large players like Google, Verizon, UPS, and such already have such data, there must be smaller players for whom it would be useful. Cities themselves might find it useful for traffic planning. Also, on a scarier note, Uber knows the route that its customers take. If it can link that data to demographics, then that might have some value for advertising along given routes, commercial real estate, etc.

bernardom 12y ago

> Given the sheer volume of demand for rides, the relative ease of copying this service, and the number of cars owned by Americans, I don't see how their large revenues can be anything other than temporary. I think part of it is a bet that individual car ownership will decrease with technology, which I think is a great bet. Not to say that investing in Uber is the best way to bet on that.