Can Uber Ever Deliver? Pt3: False Claims About Uber’s Competitive Advantage(nakedcapitalism.com)
nakedcapitalism.com
Can Uber Ever Deliver? Pt3: False Claims About Uber’s Competitive Advantage
http://www.nakedcapitalism.com/2016/12/can-uber-ever-deliver-part-three-understanding-false-claims-about-ubers-innovation-and-competitive-advantages.html
2 comments
I spent 3.5 years driving people around in a Taxi in Phoenix, Arizona. This was from February 2012 to October 2015, before and during the rise of "ride sharing".
For the most part, everything in this article is spot-on. For example, I agree that there is nothing especially innovative about these companies. I wrote 'Electronic Taxi Dispatch' [1] to show how a pre-smartphone GPS-enabled electronic dispatch system worked.
[1] http://www.taxiwars.org/electronic-taxi-dispatch-v1.0/
The one area where I think the article is slightly off are the comments about serving poorer neighborhoods. Taxi drivers don't like going into sketchy neighborhoods because poor people are more likely to not be able to afford their ride than rich people. Under the app system, drivers can be reasonably certain they're going to get paid, so I presume that app-drivers are slightly more likely to pick up a fare in a sketchy neighborhood, than a taxi driver who doesn't know what to expect [2]. Even so, app-drivers are looking for big fares too, and I presume they're more likely to head to well-to-do areas where they think people have plenty of money to spend on a long ride.
[2] The woman whose taxi I drove (30-year veteran) wouldn't pick up new fares when she dropped off in certain neighborhoods, not even in the daytime, because she's an old woman, and didn't want to take the risk.
edit: (note to self) https://mattermark.com/recent-uber-revenueprofit-debate-expl...
For the most part, everything in this article is spot-on. For example, I agree that there is nothing especially innovative about these companies. I wrote 'Electronic Taxi Dispatch' [1] to show how a pre-smartphone GPS-enabled electronic dispatch system worked.
[1] http://www.taxiwars.org/electronic-taxi-dispatch-v1.0/
The one area where I think the article is slightly off are the comments about serving poorer neighborhoods. Taxi drivers don't like going into sketchy neighborhoods because poor people are more likely to not be able to afford their ride than rich people. Under the app system, drivers can be reasonably certain they're going to get paid, so I presume that app-drivers are slightly more likely to pick up a fare in a sketchy neighborhood, than a taxi driver who doesn't know what to expect [2]. Even so, app-drivers are looking for big fares too, and I presume they're more likely to head to well-to-do areas where they think people have plenty of money to spend on a long ride.
[2] The woman whose taxi I drove (30-year veteran) wouldn't pick up new fares when she dropped off in certain neighborhoods, not even in the daytime, because she's an old woman, and didn't want to take the risk.
edit: (note to self) https://mattermark.com/recent-uber-revenueprofit-debate-expl...
Firstly, I'm skeptical that surge pricing cannot be predicted in advance to some degree. The weather bureau is predicting rain at 10pm on a Saturday night - doesn't that say something about the chance of surge pricing in a nightlife area? And look at the second chart on this page [1] - the surge multiplier between 7:30am and 9:30am is fairly predictable.
Secondly, this argument ignores the long-term changes to supply. Surge pricing increases the pay of drivers, so over the long term there will be more drivers signing up (even if it didn't bring out more drivers at surge times)
Lastly, even if supply was completely fixed and surge pricing simply redistributed drivers to higher fare areas, doesn't that lead to efficiencies which are shared between driver, rider and Uber? If I'm late for a job interview, I want to be able to outbid an old lady who is going to the supermarket to do her weekly grocery shopping. My gain will be larger than her loss.
[1] https://www.washingtonpost.com/news/wonk/wp/2015/04/17/how-u...