Commentary

The Few, The Proud, The Uber

Labor Day around the Mad Blog office offers some much-needed downtime to sit back, sip lemonade, and reflect on how the Internet has eaten our jobs,  taken away our free time, and turned our once-powerful nation into a Task Rabbit economy. (But one with lots of cabs.)

OK, so I exaggerate.  (Or as Homer Simpson famously told Marge about change: “It only leads to failure.”) Sure, I get that the tech world is all about disruption, and the basic capitalist tenet that whoever builds a better mousetrap (or app) -- wins.  And gets a taxi path beaten to their door?

I refer to the news last week that Uber, the app-based taxi and car-sharing service, has hired David Plouffe, the former Barack Obama campaign operative and world-class microtargeter, to bring his campaign manager skills to the start-up.  It’s war, baby.

Of course, by human standards, Uber just turned four and should be wearing overalls and going to preschool. But we’re talking about Silicon Valley. 

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Well-organized and exceedingly well-funded, Uber in its four years has already eaten up most of the globe, having expanded into 170 cities in 37 countries, And the company says it is doubling its revenue every six months. TechCrunch reported Uber’s revenue last year was $213 million on more than $1 billion of bookings; Uber takes a 20% cut of all drivers’ receipts.  

The start-up now has a valuation of more than $18 billion -- that's with a “b.” So it's worth more than Hertz, Avis Budget and even a number of younger and more progressive companies that have been around longer than Uber, like Whole Foods and Chipotle.

This amazing growth is all based on the firm having its own killer, taxi-dispatching software, and drivers providing their own cars.

“Uber” translates to “above” as in the German national anthem, “Deutschland uber alles”: “Germany above all,” which still sends chills in some camps. But by the late 1980s in America, “uber” had become hipster code for  “beyond,” as in the ultimate, a superlative adjective with an umlaut that could energize any noun.

I was living in San Francisco in 2010, which is where and when Uber started. And I will say that in a city of endless attractions, limited public transportation and about 11 working taxis, Uber was a godsend. And I guess it brought much-needed service, similarly, to many cities across the country and around the world.

But New York is different, a serious taxi town, going back more than 100 years. (Follow that cab!)  And to me, it feels like Uber is indeed occupying Paris or invading Poland with its presence -- and it needs the ministrations of a former Obama staffer in order to continue the blitzkrieg.

When I moved back to New York City in 2012, I returned to my former yellow cab habit, and found that on the whole, service had improved. The cars were actually greener, cleaner, quieter and less smelly. And being able to pay by credit card made the process speedier and a lot more convenient.

I also knew that the drivers represented the vast immigrant population of the city; for generations, driving a cab has given these people an entry into middle-class life. In New York, medallion cabs are far more regulated than Uber cars. So I was not a fan of Uber’s attempt to break the taxi union here.

But I polled my Uber-using friends on Facebook for their feelings, and the reaction was overwhelmingly -- even rabidly -- positive. The game-changer is the Uber app, which provides a map for users to “follow that cab”: to see exactly where the car is and how quickly it’s making its way to your location. The app also enables riders to rate drivers, which weeds out duds. Drivers, in turn, can rate users, which cuts the probability of getting into a car that smells vaguely of vomit.

Others pointed out that Uber is a blessing for people with disabilities who can’t stand in the street to hail a cab, and also helps people of color -- who, sadly, are still discriminated against by some drivers. All my friends agreed that Uber is essential during bad weather, and a life-changer for customers who need to get anywhere during the witching hours between 4 p.m. and 5 p.m., when cab drivers change shifts. Desperate New Yorkers have been known to run into traffic then, trying to negotiate a rate with an off-duty cab for way over the meter price.

This brings us to Uber's “surge-pricing”: during rush hour or downpours, the cost of the fare can double or even triple.  It’s a contentious issue that has already brought Uber a lot of bad P.R. The fear is that once the company monopolizes the business, there will be no recourse to surge-pricing.

Still, I’ve got to say I do see some benefits in Uber's invasion of, er, presence in, New York. It has forced some corporate car companies to improve. Indeed, several have already introduced similar apps with GPS maps. And medallion owners should feel the pinch and have to up their consumer service game, as well.

But just as I started really warming to the service, I saw a new report from the Verge showing the rapaciousness that has allowed for such stunning growth. Writer Casey Newton says Uber hires people to request rides from competitors, then cancel the orders -- all while using pre-paid cellphones and credit cards that are intentionally hard to trace. Earlier this month, competitor Lyft accused Uber of ordering and canceling over 5,000 Lyft rides. Uber responded by accusing Lyft of  playing dirty pool, too. Then there’s the issue of stealing, I mean recruiting, drivers from other companies -- because Uber can’t find them fast enough.

Competitors are encroaching on Uber -- but maybe the whole taxi-limousine thing is just an off-ramp on the company’s road to bigger things. (After all, we won’t even need drivers in the future when we all are in our autonomous Google cars -- being driven, after a software override, into the ocean or a locked facility.) Uber has already launched a messenger service in New York -- just the beginning of using its software platform to create a worldwide shipping and logistics grid.

Eventually, like many other Silicon Valley empire-building companies using a winner-take-all, ask-permission-later strategy, Uber will go public, and make billionaires of fewer than 200 people, while flattening everyone else. There will be backlash, no doubt, and David Plouffe will have his work cut out for him. 

But imagine if we could figure out how to create world peace with the same speed, using a variation on the software with which Uber has so successfully matched people and cars.

Instead, the focus, as has happened to other tech giants, will probably be on corporate spying and consumer behavior modification. One nation, Uber-Google-Amazon, over-apped, and above all, having many more taxi drivers madly competing on the streets, perhaps in Thunderdome style.

Happy Labor Day!

18 comments about "The Few, The Proud, The Uber".
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  1. Arthur Greenwald from Greenwald Media, August 28, 2014 at 1:11 p.m.

    Lippert's points about Uber are right on target but really don't go far enough. Beyond the bureaucracy and outrageous "medallion" fees, there are important reasons we regulate public transportation. It's astonishing that the same people who decry poverty wages in fast food restaurants are just fine with Uber's drive-at-your-own-risk employment practices. "Disruption" does not equal "better" until common sense imposes restraints.

  2. Nancie Martin from Tell My Story, August 28, 2014 at 1:13 p.m.

    Uber seems like a swell idea. But the unions my parents belonged to put dinner on my childhood table, and I continue to support them. And I'd rather have a savvy cabbie who knows every corner of the city than a newbie Ubie.

  3. Edward Shain from EMS Associates, August 28, 2014 at 1:27 p.m.

    This will work up to a point. Uber is rabidly ambitious. That's not speculation. Trevor Kalanick is a piece of work. If you're in his way he simply drives over you.

    The bugaboo that no one talks about, though, is that as the service economy develops, there are fewer good jobs available.. That means fewer and fewer customers with the wherewithall to pay steep prices.

    Kalanick won't care. He'll make his in the IPO. One wonders, though, what will happen when software turns everything into a commodity, something universally available and universally cheap?

    As Arthur Greenwald noted in his comment about regulating public transport, there used to be something known as utilities, services so valuable and so universally needed, cities and states either owned them or severely regulated them to prevent monopoly/oligoply pricing.

    The worry here is that as inequitable wealth distribution continues, there'll be no one left to fund the political battle to bring utilities back under control.

  4. Ellen Considine from SwartAd, August 28, 2014 at 2:56 p.m.

    An article in LAist reported a man who was charge 7.75x the normal rate due to the surge pricing (resulting in an over $800 charge instead of $113-ish). In LA, there are a lot of people who had too much to drink and hence are vulnerable to manipulation, but I guess that's happened to people in taxis as well, on occasion. Buyer beware. http://laist.com/2014/08/21/passenger_says_uber_driver_charged.php

  5. Mark Myers from A Smarter Way to Learn, August 28, 2014 at 3:06 p.m.

    If Uber is stealing drivers from the cab companies, it's only because the drivers can make more money with Uber than they can with Yellow, so I don't buy the anti-working-class argument. The cab companies should be adopting Uber's practices, not running to the government to protect them from a competitor with a better idea.

  6. Dean Fox from ScreenTwo LLC, August 28, 2014 at 5:45 p.m.

    From today's New York Times:
    This week The Verge published memos detailing Uber’s campaign to recruit Lyft drivers. According to the report, Uber hires contractors who request Lyft rides and, before the ride is out, attempt to recruit drivers to sign up for Uber.

    What is most notable is the indiscriminate nature of Uber’s campaign. During recruiting missions, contractors were paid $750 for any Lyft driver they signed up. The contractors had to be warned to wait a few minutes between rides, so as not to call the same driver twice.

    Uber is not going after the best Lyft drivers and cars. It’s going after any Lyft driver with a car and a pulse. And that’s the problem: If Uber itself thinks almost any Lyft ride can be easily transformed into an Uber ride, why shouldn’t we just use Lyft?

  7. Tom Messner from BONACCOLTA MESSNER, August 28, 2014 at 6:02 p.m.

    I use UNTER. Otherwise known as the subway.

  8. Paula Lynn from Who Else Unlimited, August 28, 2014 at 8:44 p.m.

    There will be chaos when there is no regulation including insurance coverage. You are right, a few billionaires, a few making some decent bucks and the rest will eventually suffer from lower wages and higher costs. Why should the billionaires care ?

  9. Tom Messner from BONACCOLTA MESSNER, August 29, 2014 at 7:53 a.m.

    UBER does have a much higher percentage of women drivers than medallion taxis. So they should have lower insurance rates.

  10. Steve Ellwanger from Marketing Daily, August 29, 2014 at 9:26 a.m.

    Without taking sides here, the Boston Globe recently did a fantastic three-part investigative series on the taxi industry in Boston. Drivers working for slave wages while the person who owns the majority of the city's medallions made millions, had dubious insurance for his cars, fruitless lawsuits by people involved in accidents with those cars, a complete mess. The police department was supposed to be preventing all of this but it wasn't. The mayor and various pols vowed to create a commission to investigate and change things. Of course, this has yet to happen...

    http://www.bostonglobe.com/metro/2013/03/30/spotlight/9eVWW7Y6RaOIqII62n2XlI/story.html

  11. Barbara Lippert from mediapost.com, August 29, 2014 at 7:18 p.m.

    Under/over. Steve, that piece in the Boston Globe was heartbreaking. Hard to say, then, which is better, which is worse, if Medallion owners are scamming the drivers. Certainly, Uber drivers in NYC do much better financially than medallion drivers. And they do much better than most Uber drivers in the rest of the county, who are happy to have even a shittily paying job, one of several they have to cobble together, if it means they can make their own hours and be their own bosses. It's just hard to see this happening once again-- Uber will go public, make another fortune for the 3 %, off shore whatever administrative jobs they may have, and start squeezing the drivers more and more on pay.

  12. Jeff Miller from JMComm, August 29, 2014 at 11:58 p.m.

    I like doing it the old fashioned way, hailing a cruising limo. Great column, Barbara.

  13. Patrick Keyes from santoni | keyes, August 30, 2014 at 4:53 p.m.

    I was recently meeting a friend/former colleague for a quick drink as he was on his way to LaGuargdia. We agreed to meet at a place we like near Madison Square Park. This friend was in from out of town but he lived and we've worked together here for years so he more than knows his way around town. As he began texting that he was running 10 minutes late, then 15 minutes late, then finally a half hour late i texted him, "Where on earth are you coming from that you're running so behind?" "SoHo House." he replied. "SoHo House? There are cabs everywhere around there!" I texted in frustration."Oh," he replied," I don't need a cab, I'm an a Uber but he doesn't know which streets are one way only so we're getting turned around. I'm almost there.!" I was so disgusted I ordered a drink without him. Of course I was dying to ask him how much his Uber charged him to spend 45 minutes driving around in circles from SoHo House to Madison Square Park but that would have been in poor taste. Instead I'm flaming him anonymously here in the comments section of your great article instead! Thanks Barbara. See you soon! Best, pk. Ps. Richie this means you! Ha ha ha!

  14. Barbara Lippert from mediapost.com, August 30, 2014 at 5:19 p.m.

    Patrick-- there's another thing that makes the Uber experience different-- the car could be right near you, but have to go around backed-up one way streets, etc. that could take another 20 minutes. And because there are so many more taxis on the road, sometimes three yellow cabs can pass you by while you stand there waiting for your Uber.

  15. Jim English from The Met Museum, August 30, 2014 at 7:03 p.m.

    In a way I see Uber as crowdsourcing for the transportation industry. The masses encroaching upon presumed industry borders: regular people serving as cabbies, regular people making Super Bowl ads. (Taxi drivers and ad creatives not too pleased.) By the way, Barbara, glad you're back in our "serious taxi town."

  16. Alissa Greene from ASU , September 1, 2014 at 10:03 p.m.

    As a student in what I assume to be one of the largest, most promising target markets of Uber in the Phoenix area, I must say a lot of the problems that may result from Uber’s Blitzkrieg efforts to monopolize the taxi service industry do not apply to those of us not in places like New York or San Francisco. We feel Uber’s presence in a different way here; Uber has become a trend on a night out. I have seen them grow using insane amounts of event/partnership marketing among top events taking place in the large cities of Arizona. They come off as calm, cool and collected when groups of inebriated adults are leaving The Phoenix Open or Scottsdale nightclubs. To be quite frank, my eyes were just opened to Uber’s success when reading this article considering the fact that a car service is not the most pressing issues among us Arizonans. I found it interesting they are receiving negative PR and sound like they are on the road to a hot mess. After reading this, I agree Uber seems fervently determined when it comes to taking over the taxi capitals of the world. Considering their massive amounts of promotional efforts in this state I would make an inference that it seems they may better succeed in towns like Tempe or Scottsdale, Arizona where it is more of a luxury when going out and people have the money to spare. However that leads me to question why their promotional efforts still seem over-abundant when every average single business man or sorority girl have their Uber apps ready to go every night. I’m curious what types of competitors this will bring in areas similar to Phoenix.

  17. Michael Garcia from Columbia College , September 2, 2014 at 11:46 p.m.

    Living in Chicago I've only used Uber a few times because I like to bike more but I still have the app. The ease and convenience given by an app based system makes a huge difference to me. I can continue to socialize if I am at a friends while I watch and wait for the car to arrive instead of standing outside trying to flag down a cab. Also when I have out of town visitors who don't have a bike we can either Divy or I can easily take out my phone and request a car. I didn't realize they charge more for when it's bad weather and that should definitely be changed. Flat rate always and great drivers. I like that I can review each driver because I have had drivers in the past take longer routes, I guess to make a little more money. But overall I do enjoy Uber and look forward to see it change and grow, hopefully for the better.

  18. Derry Vaughn from Nab A Cab, September 22, 2014 at 8:30 p.m.

    I need feed back on my "patent pending"invention.And I need investors.Plz.Go Indiegogo,and YouTube to view Nab A Cab!

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