[krapht]

I also drove for Uber in DC for a few months while I was between jobs. I thought it would be a fun and easy way to get a few dollars for beer. My experience mirrors that of the reporter. Towards the end, I would only drive during surge pricing hours, as that was the only way to make a reasonable net hourly wage.

I have no problem hailing an Uber - they are really, really cheap. However, it's a raw deal for drivers. Uber turns a blind eye to driver-contractors driving without commercial vehicle insurance. It has to, as the additional cost (which is pushed onto the driver) would cause the driver's hourly rate to plummet even further. In addition, there is no way to purchase commercial insurance on an hourly basis - therefore part-time drivers would be squeezed out. The flat-rate $1 safe rides fee causes low-distance fares to be even more unprofitable, even when many short trips are already a bad deal due to the overhead involved in each pickup and drop-off.

To fix this, Uber should probably cover drivers with an on-demand commercial policy while they are logged into the app. The flat per-ride fee should go away. And while I doubt this is going to happen, Uber should probably also reduce the commission they take per ride.

[aikah]

> It has to

So basically you mean than Uber can only make money if most their drivers do not respect the law. Which gives Uber an unfair advantage over the competition (regular taxis that do respect the law ). It's like saying employer X doesn't check if his employees are legal workers, because if he did it would be too expensive to do business. But hey, even startups got to hussle to make a good living.

[danieltillett]

This is the whole idea behind regulatory arbitrage. Find an industry that has built up "inefficiencies" due the law and then undercut by deliberately breaking the law.

The only thing that amazes me about uber (apart from its current valuation) is that the taxi industry is powerful enough to prevent the issuing of more taxi medallions, but not powerful enough to get the current laws enforced against uber. Assuming uber recognised this in advance (I don't have any evidence that they did) then this was pretty clever.

[rhino369]

"Taxi lobby" makes it sound like Uber is disrupting some megacorporate industry who control government in smokey back alleys. Taxi corps are small, many are essentially sole proprietorships. The drivers are essentially all running their own business, but the medallion owners tend not to be huge corporations.

Medallions are required because cities regulate taxis prices and policies. Doing so distorts normal market forces. So medallions are a sort of conciliation prize for taxi drivers having the business model dictated. Govenment limits price, but also lowers competition to ensure they can make a profit.

Uber isn't beating some mustached villinous Taxi lobby. They are beating cities who wanted a regulated car service.

I think Uber is probably better than the status quo, but it's not fighting big business, it is big business.

[rayiner]

Uber is nearing $10 billion in bookings, or about 50-100x as much as the largest cab companies. The need of some people to see every tech company is the underdog is ridiculous. By and large the whole point of tech entering these traditional markets is to use capital and technology to achieve scale and efficiency the small businesses playing in those spaces can't hope to match.

[cdcarter]

You need to look at market size to make that statistic anywhere near interesting.

[rayiner]

Uber is 2-3x the size of the whole taxi industry in SF. Remember, it's not like there is a national taxi regulatory system. It's a bunch of separate municipal systems and Uber is far bigger than any of the other players in all of them.

[wutbrodo]

> Taxi corps are small, many are essentially sole proprietorships. The drivers are essentially all running their own business, but the medallion owners tend not to be huge corporations.

Do you have a source for this? I'm only familiar with Chicago numbers, but a medallion costs $360,000[1] and the top 2% of medallion owners own FORTY ONE percent of the total[2]. 3/4 of medallions are owned by corporations who own more than 2 medallions (i.e. $720,000 in up-front investment or more).

[1] http://www.chicagobusiness.com/article/20130913/BLOGS02/1309... [2] https://img.washingtonpost.com/blogs/wonkblog/files/2014/06/...

[danieltillett]

In some markets there are medallions that are owned by individual owners and other that can be owned by corporations. Looking at NYC these are both still worth a lot, but they are falling in value thanks to uber and co [1].

1. http://www.nytimes.com/2015/01/08/upshot/new-york-city-taxi-...

[danieltillett]

I agree. I was more making the point that regulatory arbitrage only works when you attack an industry without enough clout to shut you down, but enough clout to make the market worth attacking. Good luck trying to run regulatory arbitrage around the pharmaceutical industry. There would be massive profits to be made if you did, but you can expect to spend a long time in jail if you tried.

[randomname2]

Some argue big business is big thanks to regulation/government protection keeping competitors out, by preventing them from becoming big or entering the market in the first place.

Isn't it very similar when Uber drivers aren't allowed to compete with the taxi industry, who enjoy a government-sanctioned monopoly?

[fx85ms]

Forgive me if I sound ignorant of America's laws because I'm not from this country, but I'm really puzzled as to why Uber is able to continue to operating in the country. Why is Uber exempt from all the taxi laws that are currently in place in the states, able to make itself sound like a legitimate business despite breaking regulations everywhere? Feels to me as if you can justify breaking regulations by "satisfying customer demands". I'm really curious.

[cheald]

Uber has "asked forgiveness rather than asking permission" - they've made themselves indispensable in the markets they serve, and it's politically risky to shut them down, because they are serving a very real need in the transportation industry, and people don't want to see them go away. I think that Uber correctly recognized that the taxi market was under regulatory capture, and that they weren't going to be able to break into the market through legal channels, so they took a ballsy risk and decided to give it a shot anyhow.

It seems to be paying off. Massachusetts, South Carolina, Texas, and Virginia have all reversed decisions which banned Uber in their jurisdictions.

[stickfigure]

Uber can only make money if most their drivers do not respect the law is an assumption. Keep in mind that Uber evades the cost of a medallion, which the article says runs $420-460 per week in Philly. That eliminates $1700+ per month of cost that effectively goes to the banks that fund loans on these assets. I don't see much social good in that.

Uber may additionally benefit from regulatory arbitrage, but it is not obvious that their business requires it.

[pmorici]

I drove for Uber in Baltimore last spring for a few months during weekends just for fun and I agree this article's assessment is _dead_ on.

I've since stopped using Uber even as a rider. The way they treat the drivers is pretty horrendous and I don't want to be an enabler to that. Lyft is a bit better because at least I can leave the driver a reasonable tip through the app.

[jaredhansen]

>The way they treat the drivers is pretty horrendous I keep hearing this, and it's ... confusing. I mean maybe Uber's really nasty to drivers, I guess, but if it is, then what are all these Uber drivers doing?

It takes all of ... what, like 45 seconds to download Lyft? If Uber is so bad, why don't all the drivers just switch?

I don't know enough about the economics of any particular driver's situation to know how many people it works for or doesn't, but (1) believing that Uber drivers get screwed, (2) believing that, say, Lyft drivers have it much better, AND (3) recognizing that far more people choose to drive for Uber than for these other platforms, requires us to believe some rather surprising things about the subjective mental states of the many, many Uber drivers, right?

I mean: Damn, I hate my job, my company treats me terribly, and a substantially identical job is about 4 taps and 2 minutes away, and ... I guess I'll just keep working for The Man.

Why would anyone do that?

[pmorici]

You can't just download the app and start driving. There is an application process. The issue is they are duopoly as far as smartphone hailed transportation goes and as a driver if one already has you locked into a car loan it's a very limited choice and a bit of a sharecropper like situation. It isn't like being a software engineer where there are dozens of top firms competing to hire a limited pool of talent. How would you feel if your home loan for example was tied to your employer and your salary was adjusted by your employer every 4-6 months based on what they felt was fair.

[stickfigure]

I don't buy this at all. Whatever the application process, it's much easier to switch between Uber and Lyft than it is to move to a different software (or almost any other kind of traditional) job. The parent's question stands.

[pmorici]

I never said I thought Lyft drivers had it much better. I said I don't have a problem using them because I can use the tipping mechanism to make sure that I personally am not taking advantage of them. Lyft's proposition for drivers is substantially similar to Uber.

[smelendez]

I've had drivers in a couple of different cities tell me they're on both apps, but there are generally more fares on Uber, since it's a more famous brand.

In some cities, the base fares are notably higher on Lyft, too, making more money for the drivers but driving more customers to Uber. I'm not sure about other apps (Sidecar, etc.).

But basically, the drivers can get a cheap fare fast on Uber, or they can wait longer to get a slightly better fare on Lyft.

[hkmurakami]

I have found that the two services are comparable in supply side liquidity in SF, but that Uber far outpaces Lyft in that regard near Stanford.

I wonder if it's possible to stave off this issue.

[vacri]

requires us to believe some rather surprising things about the subjective mental states of the many, many Uber drivers

Only if you believe that humans are the sort of simplified perfectly-informed stimulus-response mechanoids (and operating in a simplified-rules environment) that game theory requires. There's nothing surprising here; it's actually pretty mundane.

[querulous]

i'd bet most uber drivers would quit if they hadn't financed vehicles they can't afford without driving for uber

[jaredhansen]

That's a pretty interesting point, and one that could be material. Does anybody have any data on the percentage of Uber drivers that have financed their cars through Uber, or what the "oops, I need to get out of this mess now" terms are in those financings?

I don't have any and am curious - my mind might change depending on what those numbers look like. If it's all a big bait-and-switch and then you're stuck to it because you can't get out of the car you just bought, well, that's a different story than the way I've seen it to date. Anybody with info on this?

[Dylan16807]

So how much does commercial insurance cost? And since you have experience maybe you can answer this: What if you accept the insurance argument that having the app open is commercial, and shut it off to find a parking space after every ride. How long would that take, is it feasible?

[Tycho]

maybe the insurance industry could innovate and solve this problem

[dragontamer]

https://www.geico.com/getaquote/ridesharing/

[TeMPOraL]

Why would they? If they don't have to pay out money to people who get screwed by Uber, they profit.

[rhino369]

Because they'd make a profit by selling it for more than it costs, which is their entire business.

I'm pretty sure they do provide this insurance, Uber drivers just don't pay for it.