Daniel Davie’s 1 minute MBA or how to conduct policy analysis fast and cheap has a critical point in looking at the validity of an argument:
Good ideas do not need lots of lies told about them in order to gain public acceptance. I was first made aware of this during an accounting class. We were discussing the subject of accounting for stock options at technology companies. There was a live debate on this subject at the time. One side (mainly technology companies and their lobbyists) held that stock option grants should not be treated as an expense on public policy grounds; treating them as an expense would discourage companies from granting them, and stock options were a vital compensation tool that incentivised performance, rewarded dynamism and innovation and created vast amounts of value for America and the world. The other side (mainly people like Warren Buffet) held that stock options looked awfully like a massive blag carried out by management at the expense of shareholders, and that the proper place to record such blags was the P&L account.
Our lecturer, in summing up the debate, made the not unreasonable point that if stock options really were a fantastic tool which unleashed the creative power in every employee, everyone would want to expense as many of them as possible, the better to boast about how innovative, empowered and fantastic they were. Since the tech companies’ point of view appeared to be that if they were ever forced to account honestly for their option grants, they would quickly stop making them, this offered decent prima facie evidence that they weren’t, really, all that fantastic
I was reminded of this point as I read through a very interesting post at Talking Points Memo on Uber’s business model:
Uber’s massive PR/propaganda efforts and its aggressive attacks on regulators, competitors and journalists tend to support the hypothesis that its growth/valuation objectives are highly unrealistic. If the business analysis outlined here was substantially wrong, and Uber’s growth/valuation objectives were based on highly credible new sources of competitive advantage, then one would expect Uber to devote major effort to lay out reasoned arguments and evidence supporting its business case to the capital markets. Those markets know there have been a huge number of well-publicized startups whose founders harbored dreams of staggering wealth but had business plans that could not withstand any objective scrutiny. If Uber was convinced it had a powerful plan, it should welcome scrutiny from independent financial analysts and respectfully engage financial analysts and journalists who might have questions or concerns. Instead, Uber has mounted a massive PR effort that ignores the substance and approach of business startup cases, and treats the company’s development as a no-hold-barred political campaign. Instead of explaining how today’s niche business would be transformed by a decade of Ebay-level growth, or addressing any of the other questions that investors might have, Uber’s PR emphasizes soundbite claims about current service (quotes from Silicon Valley tech workers who love the app or from rich Manhattanites who like Uber cars better than yellow cabs). To distract from business issues like cost competitiveness or the scalability of growth, Uber’s uses explicit political propaganda based on ideological/tribal hot buttons…
Okay, I’ve not invoked the Android v. iOS flame war bait, but this should be good… open thread
Xantar
Ooh, I can play this game!
What do I win?
Yatsuno
Calling it now: the founders are stashing seed money in the Caymans & will flee the country once Uber falls apart.
a hip hop artist from Idaho (fka Bella Q)
OT, can you answer the football question burnsie asked in a thread last night? I can’t recall which one.
Barbara
It’s not that the business model is absent, but it is highly dependent on regulatory arbitrage. When regulatory arbitrage is your modus operandi, one thing is above all paramount: the existing competitors must continue to be regulated to its disadvantage and your advantage. Maybe some taxi regulations need to be rethought in light of Uber, but then, they will be relaxed for traditional models too, and most likely, Uber will become subject to the revised regulations as well. In which case, its competition will expand exponentially, and among those competitors will be significant brands that people perhaps trust and at least know better than Uber. Uber’s best plan is that it remain differentiated from its competitors in terms of regulations. Hence, the public relations campaign.
a hip hop artist from Idaho (fka Bella Q)
@Yatsuno: Are they really that clever? Not to suggest it won’t fall apart, as I believe it should based on its business model.
Hunter Gathers
Uber: For Upper-Class Twits, By Upper-Class Twits
kc
“Blag?”
CONGRATULATIONS!
Of course a business that relies on shady accounting and total lack of regulatory oversight will put a nasty dent in the existing business it’s supposedly trying to torpedo.
Anyone see if the AirBNB guys have cashed out yet? Same bullshit.
Uber’s just another scam put together by some looters and moochers calling themselves Randian heroes, God, how many times do we have to watch this movie before someone changes the channel?
CONGRATULATIONS!
Yeah, let’s try this again.
OK. A “business” that relies on an existing method of doing business, minus all regulation and financial disclosure, is not a business at all, it’s a stock pump-n-dump scam cooked up in the bowels that serve for brains of one of our Randian Masters of the Universe.
See also: Airbnb.
Like Airbnb, these unregulated scam operations that run on faith and the needs of an increasingly impoverished public need to be stopped in their tracks, shut down, and principals jailed. Sadly, they’ll get a medal from some “free enterprise think tank” and be feted as an example of how Americans should be doing business in the 21st century.
This is not how anybody should be doing business in the 21st century.
Platypus
In other words, people prefer to make good arguments when they can. When they consistently resort to fallacies and attacks instead, wonder why.
Felonius Monk
Very simple and ancient business model: Fleecing the Lambs.
Amir Khalid
I’m still wondering how come Uber is a legit business. It seems to be a large-scale kereta sapu* middleman operation. Uber is already operating in Kuala Lumpur, by the way. At any rate, it has a KL page up already. The Commercial Vehicle Licencing Board is likely going to be unhappy that a company is inviting Malaysians to make unregulated commercial use of private cars. I know that regulators in some other countries are already unhappy.
*Malaysian slang for unlicenced taxi
Eric U.
I see the Uber model as being much more exploitative than Airbnb. Airbnb seems to have been shut down pretty tightly around here, although that’s not surprising because people rented out their houses for football weekends and they would always get shut down eventually. Dunno about Uber. Not sure Airbnb expected to have as many commercial properties involved. There was one couple here that was renting out their house using Airbnb instead of having tenants, they were shut down. You can rent out your house up to 7 days a year without a hotel license — not quite enough for a full football season of weekends
@Amir Khalid: I don’t see how it’s legit either, although a lot of the cars are actually cabs.
Mnemosyne
@Yatsuno:
Nah — once Uber goes under, its top executives will spend the rest of their careers bouncing between boards of directors of major companies because they’re “innovative” and “forward-thinking” and, most importantly, because former Masters of the Universe can never, ever be allowed to really fail lest anyone start to wonder about the competence of current MotUs.
Thoroughly Pizzled
I never trusted Uber. They call it the sharing economy, but where is the sharing? All they seem to be doing is exploiting and taking.
Three-nineteen
The nice thing about Uber is that you can track your cab on your phone. You know that there is a cab assigned to you, you know where it is, and you know when it will get to you. This is a lot better than calling a cab company and having them say “Someone will be out in 15 minutes” and then calling them back 45 minutes later because the cab hasn’t arrived yet.
Punchy
So another black kid (12 y.o.!) shot dead by One Time for reasons that stretch credibility. As soon as I heard the news, but before a photo of the kid was released, I asked my wife where I could wager $1000000000000000 on a bet that the kid was black. Sho nuff.
White people with guns? They charge into Denny’s and Chipotle and Target fully strapped with actual rifles; cops ignore ’em. Black children with toy guns on playgrounds? Shot dead, not even a “wound him” shot attempted. Anyone that thinks a white kid in this situation is anything worse than tazed (and then the PD would be sued by said white kid’s parents) is clueless.
Villago Delenda Est
It’s a very sad commentary on the state of American business ethics (yes, I know…contradiction in terms) that these assholes can operate at all.
Wall Street needs to be burned to the ground, and then salted.
Wipe them out. All of them.
Villago Delenda Est
@Three-nineteen: Apropos of nothing.
scav
Even if it was 199% legit, there is really nothing there there in what they do. Without govt oversight protecting copyright or whatever, all they have really in their favor is a positive brand image vis-a-vis the next twin. I suppose scale, for a while. As it is, it seems to be a scheme explicitly ripping off users, workers and govts simultaneously, perhaps to an unusually explicit degree, but nothing special otherwise. All in a hipster candy coating but hollow inside like the disappointing easter chocolates.
Villago Delenda Est
@Xantar:
Where shall we deliver your Intertubes?
CONGRATULATIONS!
@Punchy: Can’t be done. You simply cannot “shoot to wound”. You’ll just miss, and, if very lucky, you won’t kill anyone standing behind your target.
That’s really my only objection, because right here you state the heart of the problem:
If the cops unleashed some lead goodness on these white self-proclaimed defenders of the Second Amendment every time they walk into a Target or Starbucks, we’d all have a lot fewer problems.
Eric U.
getting in an unregulated cab seems like a really bad idea. As Uber seems to be proving
Mnemosyne
@Three-nineteen:
Somebody was saying that they have an app (maybe called iHail?) that does the same thing that several traditional cab companies in his city have signed up for.
I do think that Uber and Lyft may end up shoving cab companies into the 21st century when it comes to dispatch and payment, even if they come kicking and screaming.
Gene108
@Amir Khalid:
The taxi license (medallion system) in the US is, if not outright corrupt, has started to screw over cab drivers, in the name of providing a public service.
Article on the situation in Philadelphia.
http://www.philadelphiaweekly.com/news-and-opinion/cover-story/Overworked_Underpaid_Fed_Up-247142151.html
Uber, as stated above, is filling an arbitrage niche that can benefit both the cab driver and theoretically the consumer.
I do not know about KP, but Philadelphia and probably other US cities, opened the door for Uber by making driving a cab a business with high overheads and little money, despite the fact places of a certain size will have a need for cabs.
Gin & Tonic
@Amir Khalid: There always seems to be an avenue for someone to exploit regulatory loopholes to provide cheaper transportation for people who need or want it, and then by virtue of their presence force the regulatory system to adapt, at least partially. In NY, “gypsy cabs” at the low end and “black cars” at the high end more or less forced the creation of green cabs. The “Chinatown bus” phenomenon got big because it was cheap, and eventually they became full-fledged bus companies (although one has been terminated because they saved money on all that inspection and licensing stuff.) There are Dominican and Salvadoran vans up and down the I-95 corridor. Uber is just the dudebros’ way of doing what the poors have been doing for decades.
Gin & Tonic
@Gene108: Taxi medallions in NYC change hands for over a million bucks.
BR
@Gin & Tonic:
This.
CONGRATULATIONS!
@Three-nineteen: Oh well, hey, convenience.
Fuck regulations, laws, and safety, amirite?
Gin & Tonic
@Three-nineteen: Last time I called a (licensed) cab in a major US city, they texted me three times prior to its arrival and called me when he was in front of the door.
srv
You people can support the innovator, or you can support Glibertarian (capital G for Gigadollars) victim Peter Thiel’s Lyft.
From his mouth to your gliberal talking points. Well done, Peter.
ChrisH
@Three-nineteen: Of course, cab companies could make their own app. It isn’t really that big a barrier to overcome, certainly not worth 20% of cab fare.
@Gene108: I definitely would like to see the rent seeking medallion rules get changed. Though it seems like a city with strict medallion rules wished to crack down on Uber, it could do so pretty easily. Simplest sting operation ever: order a cab, get ferried to the location and then fine the driver for not having a medallion. Would that constitute entrapment? Seems the same kind of thing as Vice arresting prostitutes in a sting.
ChrisH
@srv: Is Lyft in anyway different than Uber in terms of its business plan? It’s just struck me as the Target to Uber’s Walmart.
different-church-lady
@Mnemosyne:
Uber and Lyft will be the catalyst for the change, but some other company will deliver on the actual goods. Because Uber and Lyft will be far too determined to hang on to their current model and have already declared professional cabbies and cab companies to be the enemy. Meanwhile someone else will court them.
I’ve said it before, I’ll say it again. Uber is to cabs what Napster was to music.
canuckistani
I can’t see wanting to take an unlicensed, unregulated taxi in order to save a couple of bucks.
CONGRATULATIONS!
@srv: That’s…wow. Pot, kettle, black, etc.
@canuckistani: In many countries that’s a great way to end up dead in a ditch. Even here, robbed and/or raped at a minimum.
srv
@ChrisH: Great question. You sure don’t see the media hammering Peter with those questions…
I wonder what’s up with that.
different-church-lady
@srv:
Hey, you know what Thiel? Fuck you in the ear. Your product is literally the WORST goddamend digital experience I have ever had in my life and I wouldn’t touch it wearing a HazMat suit if others didn’t occasionally force me to.
ChrisH
@srv: I think some of the Target analogy is baked into that. The #2 guy gets surprisingly less flak even when doing the same things.
Gene108
@Gin & Tonic:
The difference between Uber and the Chinatown bus companies is the possibility of Uber’s scale ability.
Chinatown busses are not running in KP, Europe, etc.
This is what has investors excited about Uber, versus thinking about taking one of the Chinatown bus companies public.
srv
@ChrisH: Except Peter and bro Andreessen (of Netscape and Andreessen Horowitz – investor in Lyft) are the darlings of the tech villagers.
ChrisH
@Gene108: That was the whole point of the TPM article: Uber doesn’t really have secret internet scalability. It still needs cars and workers out on the road and at the end of the day having a bunch of independent drivers can’t work as efficiently as a fleet of cabs in terms of maintenance so it can only be competitive by gouging consumers in high demand periods, screwing its drivers, or flaunting regulations its competition is forced to follow. And yet investors are assigning it value as though every taxi cab on the planet will belong to Uber in 5 years.
different-church-lady
@Gin & Tonic:
Which is going to be their very downfall. Nobody’s coordinating “the poors” efforts, nor making millions doing it. It’s underground and it stays underground.
But just like Napster, Uber took something from the underground and made it huge, coordinated, and public. The idea that the dudebros’ can’t see it is kind of astonishing.
Liberty60
From what I can tell, all Uber and Lyft do is sell software; they don’t hire the cab drivers or own any cars or do anything other than market software that facilitates the cabbies.
So what is to stop a municipality from creating their own version of this software and giving it away to licensed cabbies? Where voters can set the ground rules fo r cabs, kind of like we did in the 1920’s?
Howard Beale IV
@Three-nineteen: The cab service in the Twin Cities has apps, and I can track them in realtime. Better still-the cabs are all clean, and I don’t have any of the Uber bullshit of ‘surge pricing’ where you can see your rride disappear when your driver finds a better mark.
different-church-lady
@Liberty60: “Uber’s pricing is similar to metered taxis, although all hiring and payment is handled exclusively through Uber and not with the driver personally.”
http://en.wikipedia.org/wiki/Uber_%28company%29#Pricing_and_payments
gvg
When Bush was “selling” the Iraq war to the public and he and his allies were claiming it wasn’t going to cost anything and we didn’t need to raise taxes plus firing anyone who said hey wait a minute……I knew he was selling bull just from that and I knew he thought every prowar congress critter would back away if they admitted it was going to cost. I always considered the public support for that venture “soft” because of that.
In other words if it sounds to good to be true, it is.
CONGRATULATIONS!
@different-church-lady: And yet the drivers are independent contractors. God, seen this song and dance all my life. The company’s the only one allowed to handle any of the money, but magically the drivers are “independent” and therefore, no SSI, taxes or benefits are paid.
Perfect business model. Fucks over employees and customers, while the guys on top rake it in.
The Other Chuck
@Three-nineteen:
Not unique to Uber or Lyft: you can track your cab on Flywheel and Summon as well, and even Yellow Cab has an app now that tracks the cab’s location on the map.
The main difference is that Uber’s app doesn’t totally suck. Yellow’s app is slow and unreliable on android and doesn’t work at all on IOS. Flywheel sucks down battery like mad. Summon is really the only decent one left, but there just aren’t enough cabs using it.
KG
two thoughts:
First, I have an app on my phone that lets me call for a taxi. Apparently no different than what Uber does, except, you get yellow cab or whoever is in the area. I don’t take taxis much, but it’s been useful the couple of times I’ve decided to go that route.
Second, to the point in the post about good ideas not needing lies, it’s one of those fundamental things about capitalism (and politics in a democratic society, really) that a lot of people forget (or ignore, mostly glibertarians on capitalism). The “market” works “best” when everyone has access to perfect information. On the flip side, the easiest way to game the system is to lie – which is why we have laws against fraud.
The Other Chuck
@ChrisH: Lyft is playing the same regulatory arbitrage, but they’ve also started a carpooling service called Lyft Line. Not quite casual carpooling, but similar idea. I can get behind a service like that, since that actually does constitute innovation.
It’s not wholly original: Uber is doing the same thing with UberPool, and it’s the core business plan of Hitch. Still it seems the sort of thing ideal for a tech solution that you’d never see from traditional cab companies.
Howard Beale IV
@Mnemosyne: Yep-in the Twin Cities iHail is used by 3 cab companies. You can order your cab from the app, shows you in realtime where they are. And since they’re a real cab and not Uber, none of Uber’s ‘Surge Pricing’ bullshit to deal with.
M31
The corollary to this in science is if the first announcement of the ‘discovery’ is a press conference (as opposed to a paper), then it’s bogus.
See: cold fusion.
? Martin
@Barbara:
Right. Now, there’s nothing wrong with a business model that relies on this – in fact we need that to happen as it’s a great way to point out market inefficiencies due to regulation (usually as a byproduct of emerging technology) and a great way to point out where new regulatory authority is needed.
But it’s inherently a fleeting thing. Either the arbitrage market is seen for what it is and is closed due to regulatory changes, or the disruptive agent is forced to advocate for continuing the regulatory structure while exempting itself, which can work for a while if you throw enough money at lobbyists but ultimately will collapse as other governmental and non-governmental layers step in.
All arbitrage mechanisms are either fleeting or will eventually degrade to minimal profitability due to competition as others copy the same model.
That doesn’t mean it’s not a bad business, but it means that it’ll eventually become a low-margin business, and so valuations need to be tempered unless a new business model is introduced, and that’s tough when you don’t own the assets and your labor force are all contractors. See the recent introduction of being able to listen to your Spotify channels in your Uber ride. It’s a really clever idea, but many drivers are upset with it because they don’t have radios that can do that, or do it well, and they’re afraid of getting bad ratings, and they don’t feel like they should have to be the ones to buy a new stereo. This is going to be challenging.
? Martin
@CONGRATULATIONS!:
Just a different form of regulatory arbitrage.
PIGL
@Liberty60: So-called Intellectual property, the corrupt courts, and outside your borders, “Free Trade” Agreements.
different-church-lady
@KG:
I find it mindboggling that to “call” a taxi in the 21st century we need a distinct add-on app loaded onto a device that already has the native capacity to call a taxi in the same way people have been calling taxis for maybe 8 decades now.
KG
@different-church-lady: eh, it saves the hassle of looking up a phone number (or multiple phone numbers) and allows me to easily schedule when I want the car to arrive.
Mnemosyne (iPhone)
@different-church-lady:
When was the last time you got an emailed confirmation after making a phone call for a cab?
We have lots if things now they didn’t have 80 years ago.
Barbara
@KG: There are so few cab companies in my little suburban enclave (which is very urban) that I know the main phone numbers by heart. Much quicker to call . . .
Uber makes the most difference in places that are not well-served to begin with — suburbs. In my little world, where I work, I walk outside and get a cab in less than a minute. There is no point in calling Uber or anyone else on the phone. And congestion or high traffic hour pricing is not my idea of a reliable service. A service is reliable because it will be there when you need it at a cost you can predict.
? Martin
@different-church-lady: Not at all. Uber will let you see how far a car is from you (maybe there is a better way of getting there if it’ll be a wait), tell it your location, get a confirmation that its coming and when it’ll be there, and pay for it, just touching your thumbprint on an iPhone.
There are 3 million people in my county, but it can still take 25 minutes for a cab to arrive unless you are at the airport (because all the cabs are at the airport). Uber can improve upon this considerably.
That’s incredibly useful and big improvement over anything we had before – particularly in areas with lower cab density like where I am – enough of them to be viable, but not so many you can just stand at the corner and hail one.
different-church-lady
@Mnemosyne (iPhone): The last time was never.
Also never felt the need for one. But then again I don’t take a lot of cabs.
I was more playing with language than making a serious argument that smart devices don’t improve the cab-hailing experience.
However, there is unquestionably an illustration of a phenomenon going on regarding that little magic device we almost all have now. At a meeting I was working, it was referred to as “gameification” — what these folks were saying is that if you want people to pay attention to your information, one of the best ways of doing it is to make it into a game app. Because people are still thrilled by the novelty of apps. They get a kind of acquisition satisfaction from just the process of “getting” an app, no matter how trivial. So people will pay attention to your information as long as you reward them with an opportunity to play with their phone. But if you hand out a brochure for the conference (still a perfectly good way of conveying the information necessary, and probably a thousand times cheaper than hiring someone to develop an app) they’ll just ignore it.
Barbara
@? Martin: In Virginia, where I live, state regulators told Uber that it didn’t care how it operated, its fleet of cars are taxis and they and their drivers will be regulated as such. So Uber shut down its operations in Virginia. The point is, at least for now, Uber is not interested in operating in any market in which it does not have a regulatory advantage.
Air bnb is a more interesting case, in my view. I can see the case for what it is doing — serving as a broker for people interested in renting out their apartments episodically, and there are definitely “apartment swapping” services that have been doing this for ages, although without cash. But the problem is that nothing air bnb does will stop someone from buying a condo and renting it out as if it is a hotel, where no one lives permanently. Of course, condo associations will act, as will more zealous zoning regulators. Air bnb could tell customers that they will only facilitate rentals for 7 out of 60 days, or something like that, to make this kind of stuff less likely, but I don’t think it wants to (for obvious reasons).
There is a difference between facilitating something that people do all the time (taking your friend to the airport in exchange for a few bucks or letting a friend of a friend coming from out of town have your house for graduation weekend in exchange for $500) and making a business model out of it — eventually, it’s too obvious that you are in fact operating taxis or hotels.
My niece rents her apartment out on a one weekend per month basis through air bnb and it makes an expensive place to live a lot more livable.
The Other Chuck
@different-church-lady:
Funny thing, when I jiggle the switchhook and say “operator, connect me with the carriage driver”, nothing happens. When I do manage to connect, I usually get someone who learned English As A Second Language Without Using Any Consonants.
EthylEster
Fper wrote:
IMO the best reporting and writing at TPM is NOT done by the folks who work there. So much of TPM’s content consists of slightly repackaged words written by others, with appropriate crediting. Repackaged several times in many cases.
Then readers chime in with REAL substance (like in this case). Yet they keep hiring and spinning out articles..which please believe them are really great reads…except they are not. I, for one, like journalists to do journalism, not repackage the work of others. Quite often I find little new behind the TPM front page headlines. I don’t get it.
Mnemosyne (iPhone)
@different-church-lady:
Sure, there’s “gamification,” but there’s also, Crap, where did I put that stupid brochure? People like having all the information they need I one place so they can call it up when they need it rather than spending 10 minutes trying to find a piece of paper.
If you don’t want to do a full app, have a PDF version of your brochure available and offer to email it to people. Then all they have to do is enter a search term on their phone or computer when they can’t remember where they put the paper copy.
different-church-lady
@The Other Chuck: Did you check the pilot light?
Liberty60
@PIGL:
Right- So Uber is not simply operating freely, it is asking for protection from you and me and every other taxpayer; To enforce its contracts, protect its intellectual property, etc.
So why should we do this service to them for free? Why can’t we stipulate that we will perform this service in exchange for certain conditions, like paying its drivers as employees?
Or alternatively- Why can’t an alternate version of their software that is different enough to avoid copyright problems be created as freeware, and made into a public utility?
I guess what I am trying to challenge is the market fundamentalist argument of “simply leave them aloooone!” which leans on their purported independence from government.
KG
@Barbara: I’m in Southern California, cabs outside the airport districts are still relatively new around here. there’s a couple of neighborhoods in Long Beach where they’re common after dark and especially around last call, but they’re far and few between otherwise.
different-church-lady
@Mnemosyne (iPhone):
Agreed. I’m not anti-technology, I just think people seem to gravitate towards an all-or-nothing view of it. Instead of choosing the best means of conveying any given bit of info, they get caught up in what they’re “supposed” to do. Even when that way creates a bunch of unnecessary and cumbersome overhead.
It’s like what I used to tell people in the early days of the internet. Small business and freelance friends would ask, “Should I have a website?” And I’d say, “Yes, every business should have a website. But maybe all your web site needs to be is your name and contact info and operating hours and some description of what you do. You don’t have to pay someone tens (or hundreds) of thousands of dollars to develop an e-commerce site so you can do all your business over the web.” People didn’t realize they could make individualized, incremental choices.
So it goes with me an taxis — I don’t need that confirmation e-mail. I already know I called the cab. I don’t want to see a map of where the cab is, because that just turns me into the digital version of the old “slave to the waffle iron light” Far Side cartoon from years back. What I want is for the cab to show up on time, and digital technology is not going to change the “bio-failures” of that. A lot of people don’t need these things, but they like to pretend that they are necessary, because they secretly enjoy the constant stimulation of their device “doing” stuff.
Katharsis
Some where in that seemingly rambling TPM article, you find out that these transportation companies always have to be localized. It is just the nature of the business. This is where I think Uber and other tech/software companies have somewhat of an advantage (not saying that validates any of their claims or valuations). Because the nature of the business restricts increasing scale with ease, you have a situation that works against the economics of the internet. The internet is about ONE BIG SOLUTION, with maybe twin-like competitors here and there. Basically, I think software needs scale in order to hammer out all the bugs and get more people using it. Tech companies like Netflix, Google, and Amazon have millions of data points to learn from and push to innovate. All these local cab/taxi/limo/van companies don’t have the scale, nor the focus to really have a worth while app.
Remember the fiasco with the ACA exchange websites? The states that prepared and stayed engaged had working web portals, while states that dragged ass and expected the feds to just work magic with all their different localized data bases was just a mess for quite a while. So I think good software needs scale and focus, and that is something that Uber excels in and their traditional competitors lack.
Don’t mistake me for some Uber apologist. I think the best solution would be for some software company to do business directly with the various local transportation companies, but that won’t be easy. This is probably happening because these companies can’t really afford it, or they don’t see it as a something they even need (not to mention hiring out-of-house software developers is never a sure thing). It’s different worlds not meshing well with each other, and it clearly will be quite some time before it settles out.
Don
I think you could make the argument that many of the Uber opponents are demonstrating flaws in their own arguments based on fudging the truth. Case in point, the “unregulated taxi” which, at least in the DC area, is simply flat-out untrue. Those black cars are all licensed livery drivers and just repurposed “limo” service. The drivers have commercial driver’s licenses and their cars are inspected.
When they came on the scene here with the plain Uber service they were more expensive than taxi cabs and yet plenty of people preferred them. Because they could hail one with transparency, pay with credit card (this was several years before the DC Taxi Commission finally mandated all cabs accepting cards, over their continued kicking and screaming), and not get into skeevy vehicles.
Uber has since added these other tiers of service and revealed themselves to be a festering pool of nutter dudebros, but I think the problem with the “simple explanation” theory in this post is that it presumes the listener has all the pertinent facts. If you pitched Uber honestly – safety regulation but not fare – back in the early days here in the District you’d have said “like a taxi, but you could know they’d accept a credit card and when they’d actually show up and the people managing the drivers will actually pay attention if one screws you over or no-shows.”
Now I guess it’s more “like a taxi, but with a different bunch of untrustworthy assholes and a better phone app.”
different-church-lady
@Don:
You’re getting to the heart of the matter: if Uber positioned itself as “A better Taxi” we wouldn’t be having these discussions. But instead they try to disguise the very fact that it’s a taxi at all. Because if they admitted it was a taxi, they’d have to play by the rules we have for taxis. And what’s the fun in that?
docg
Business has devolved into a game of 3 Card Monte with the government acting as lookout for those putting the upfront money into the game.
Mnemosyne (iPhone)
@different-church-lady:
Fair enough. I can think of reasons why having the real-time tracking would be handy (like when I call a cab for someone at work and they keep asking me, “Is it here yet?”) so it’s nice to have that functionality when it’s needed.
rikyrah
sounds like an absolute scam
different-church-lady
@Mnemosyne (iPhone):
Nice segue into a related topic: a lot of times apps are more about pacifying user impatience than actual improvement of service. Which isn’t necessarily a bad thing, but it’s not what it’s billed as either.
When you think about, “Is the cab here yet?” is a binary state: either it is, or it isn’t. I don’t need an app to give me that answer. And I don’t want to structure my life in a way where my attention is captivated by whether the cab is five minutes away or eight minutes away — there’s a word for such a condition: neurosis.
Neurosis is a fact of life. We all have to make our own decisions about how we’re going to deal with it within ourselves and how much we’re going to enable it in others.
I have a friend who lives about 70 miles away. Whenever I am driving to visit her, she sends me a series of texts while I’m en route, with instructions on what I should do and expect when I get there. I cannot — simply cannot, in spite of repeated, emphatic attempts — get her to comprehend that rather than ask me to look at my phone while driving (a dangerous and, in my state, illegal activity) the far safer and far saner method would be to simply… wait until I arrive to tell me these things. She has a need to use her device, and nothing is going to deter her from doing so, whether the person at the other end is (literally) driven to distraction or not.
C.V. Danes
You have to understand the mentality of the group of people you are dealing with. These are people who are used to dictating solutions because the’re just ohhhhh so much smarter than everyone else. They don’t ask you what you want, they tell you what you want. This is a business model that Apple has perfected, by the way…
So in their minds, it’s stupid to have to stop and explain the awesomeness of their business model because the awesomeness is self evident. And if it’s not, you’re just some stupid user who just needs to STFU and accept it on faith. And all these regulations and questioning attitudes are just the responses of small minded people who just don’t grok how awesome it is.
You’re not questioning their business model. You’re questioning their awesomeness.
Another Holocene Human
Very interesting post!
Uber’s growth is about a technical advantage that the traditional cab companies will eventually emulate. Then all that remains are their abuse of employees (hell, some cab companies already got that square away too) and systemic violation and evasion of regulations.
Those regulations are in place for a reason, as some unlucky customers have found out on an all too personal level.
Unfortunately, exploiting the fuck out of drivers as O/O is straight out of the trucking industry playbook, a development the Teamsters have never been able to adapt to, and has already been seen in more conventional operations like SuperShuttle, which is massively exploitative (but at least they aren’t lawbreakers … I guess?). As with Walmart, we all pay the cost, although SuperShuttle targets legal, recent immigrants as employees, which means their families pay the cost most of all.
Since SuperShuttle is majority business travel these poor drivers don’t even fucking get tips most of the time.
Another Holocene Human
trucking industry *playbook
Another Holocene Human
@CONGRATULATIONS!: AirBNB I don’t think started as bullshit, but at the point where all of their money comes from running pseudo-hotels with no regulation out of urban coastal high-rises, they’re in it deep.
Are weekly vacation home rentals regulated like hotel stays? I mean probably not, right? People sometimes arrange through RE agents but often arrange casually, even on Craigslist. AirBNB was supposed to be less fly by night than Craigslist. You don’t want someone to trash your place.
What’s going on with AirBNB now, though, those are hotels … and now the company becomes the partner of scumbags … it’s their revenue stream … they can’t quit it. In fact, it’s not really clear HOW to stop it. The customers scream that it’s cheaper than the Y, how dare you take it away, the crooks are raking in the cash and getting more powerful, and the regulators are running circles like overexcited toy dogs with neurological problems.
Probably it is dumb to try to get so much revenue from hotel tax. (Straight up fair property taxes would get around that particular AirBNB loophole. Pay the fuck up or it gets sold on the courthouse steps, brah.) HOWEVER, there are also a number of regulations and protections built into law after decades of experience. Tossing that all away? Problem.
Libertarians don’t care. They love affiliation fraud. Anyway, who cares about the losers (murdered ‘guests’, landlords in court with adverse possession sovereign citizen ‘tenants’, etc)? America hates losers.
Another Holocene Human
@Eric U.:
They are NOT. They force the drivers to go into debt to buy the specific vehicles they want. It’s an owner-operator scam.
And yeah, it’s what they used to call a “gypsy cab”, obviously that is an offensive term but that is historically what they were called. Unlicensed taxi? Similar to a jitney but jitneys are regulated in some areas rather than banned and jitneys, crucially, transport more than one fare per trip. Rode one in New Jersey, decent service, great price! (It wasn’t AC either, which has minibus jitneys which are semi-famous.)
Another Holocene Human
Uber is like those late-night TV advertised slimey business “opportunities” where you “become your own boss” and “buy a franchise”.
C.V. Danes
@Another Holocene Human: Yep. The good disruption will be an Uber-like app that will allow me to schedule a taxi. The bad disruption will be the downward pressure that Uber places on taxi companies in relation to their taxi drivers.
C.V. Danes
@Another Holocene Human:
In Silicon Valley, though, experience is just fear of disruption. Just sayin’.
Another Holocene Human
@Don: Sure, Uber in DC was the magic of competition, that’s the problem with an unaccountable monopoly that was more about protecting owner profits than the best interests of customers, who theoretically could put pressure on them, and drivers (who have occasionally be able to gang up and punch back).
But Uber is pulling down huge investor bucks to grow grow grow and those advantages of the app and CC acceptance are, like, not going to last forever unless you have regulatory capture such as the way Amazon.com took advantage of the way IBM and Apple and Oracle had already p0wned the USPTO and had the government enforcing a business method patent (1-click ordering) to try to keep everyone else from imitating exactly what they did.
Amazon’s a lot of bullshit too.
Another Holocene Human
@C.V. Danes: Silly Con valley where you can’t see the forest for all the moochers and looters.
They way they built huge office buildings and restrict residential development is just so cute!
Another Holocene Human
@C.V. Danes: One of the only guilt free taxi rides in the US is in Portland, where the drivers’ union bought the company.
Very happy cabbie.
Oddly, in “expensive” Europe I’ve found cab rates to be lower than in DC, NY, etc. Or smaller US cities. (Of course in smaller cities oftentimes costs are pretty high because there are just less fares all day long.)
Another Holocene Human
@EthylEster: TPM went down the shitter a while ago. I’m surprised anyone is still there.
I read RawStory for yucks–mostly for the comments because the articles are worse than NYDN and less original comment. I like me some feisty liberal commenters ready to slap around conservative or MRA Discus trolls. RS employs mods who nuke racist trolls for great justice, which is very refreshing considering what is increasingly normal all over the internet.
I miss the groovy default avatars, though. That was always good for laughs when the trolls reacted to them.
Another Holocene Human
@Barbara: The traffic hour pricing is pretty “rational” as far as that goes.
But maybe a good reminder that Uber is about making the founders rich. Not being your friend.
(In terms of transportation/logistics, charging a rush premium makes a ton of fucking sense. And it’s not like cabbies didn’t used to extract their own, “irrational” premiums, like gouging drunk college revelers to make up for all the cheap grocery store grannies they rode during the day.)
Another Holocene Human
@The Other Chuck: Carpooling services have usually had nothing to do with traditional cabs aside from occasional contracting relationships. They’ve been run by nonprofits, governments, or for-profits like vLift. There are private income streams possible as well as sometimes government assistance.
The ride board goes digital.
Another Holocene Human
@Liberty60:
Nothing.
But many of our elected officials today just see businesses as something to collect a rent from. And only think developers can enhance city life. Using technology to enhance quality of life? Intervening in a market in a way not purely parasitic or intended to enrich campaign donors? What’s stewardship, Preshuss?
Another Holocene Human
@Gene108: Chinatown bus lacks big capital and government support. Actually, government is breathing down their fucking neck.
Megabus? Boltbus? Those are big multinationals who often get big (tax, regulatory, whatever) support from their home nation. They are cutting a swathe across America, going head to head with Greyhound (which has also aways been in bed with gov’t) and Amtrak (which is kind of in the opposite position from Greyhound, a quasi-gov’t entity always trying to evade Congress’ meddling thumb).
Their drivers poorly paid and ununionized. Their service bypasses most of America to scoop up the “cream” routes. (This behavior is why interstate coach was heavily regulated in the first place, but the ‘Hound successfully got the Feds to roll that all back … and now they’re 20% of their former size, good work.) They cram customers in like sardines … and rack up unenviable safety records.
And don’t forget CoachUSA. Which is a British company.
Chinatown bus basically pulled an Uber, but now the big boys are here and they can’t compete too well. Uber is better connected than the Chinatown operators ever were.
Another Holocene Human
@ChrisH: They evade medallions by claiming to do business as livery. Livery are “private drivers”. This all starts with catering to richie riches who will NOT be inconvenienced!
Medallions were instituted to limit the number of cars on Manhattan streets. They could be replaced with a congestion charge but resistance to that has been huge (and quite irrational as some of the biggest victims of toll avoidance keep agitating to keep it that way … idiots).
The other side of medallions is the regulation that has built up. The gov’t allows the rent seeking resale to go on, which kinda sucks, and otoh if the regulation and enforcement aren’t there, then the gov’t is just collecting money for nothing. Which is exactly the situation where I live. The gov’t flat out refuses to regulate cabs but demands medallion fees. Bullshit.
Barbara
@Another Holocene Human: It’s rational but it’s not all that predictable when it can vary as much as it does. I am just noting that as a business model, having unpredictable and highly variable pricing is a bummer for repeat business.
EthylEster
@Another Holocene Human wrote:
I agree wholeheartedly. But they are constantly expanding their staff!
Recently I contacted them because a huge ad was taking up about half of the front page. I also included a remark about their practice of making several posts out of the same linked content. I immediately got a heated reply from JM himself about how this did not happen ever and that I did not understand the difference between the TPM Cafe and TPM Blog and TPM LiveWire. (That in itself is something that bugs me about TPM…just post articles, stop creating ways to generate more clicks!) I then went to the current front page and found two instances of the activity I had complained about right in the TPM Blog. I’m thinking maybe JM is yet another self-absorbed media douchebag.