[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.

[cdcarter]

Yes, of course, that's what makes the 50x-100x number so inaccurate.

[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.