Tag Archives: on demand

No, Taxis Are Not Doomed, and Here’s Why

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Last week, tech news sites were frothing at the mouth over some misconstrued details in a S.F. Examiner article about Yellow Cab filing for bankruptcy, which implied that Uber and Lyft may have have been a contributing factor.

This was cause enough for celebration as most tech writers were pleased as punch to declare Uber the victor in its prolonged battle against the dreaded taxi industry.

Here are some of the catchier headlines:

Forbes: Uber’s First Casualty? San Francisco’s Largest Taxi Company Filing For Bankruptcy

The Verge: Thanks to Uber, San Francisco’s largest yellow cab company is filing for bankruptcy

Quartz: The biggest taxi company in Uber’s hometown is on the verge of bankruptcy

Ars Technica: Uber, Lyft helped facilitate slow death of San Francisco’s largest taxi company

Gizmodo: Uber (and Lyft) Finally Bankrupted San Francisco’s Favorite Taxi Company

According to the actual story, however, Yellow Cab was hit with a multi-million dollar insurance settlement and, now that their coffers are emptied, they are filing for bankruptcy protection to keep their creditors at bay.

This is fairly standard business procedure. Not much to see here…

But the article also included a statement from Yellow Cab claiming they are not able to fill all their available shifts and they’re having a hard time retaining and recruiting good drivers.

The knee-jerk implication being that all the good drivers are going to Uber and Lyft.

Let the doomsday scenarios begin…

Slate’s senior technology writer Will Oremus got all riled up and posted an article with the very provocative title, “The End of the Taxi Era.”

He starts out:

Thanks to Uber, the entire industry is doomed.

Definitely committed to his half-baked thesis, he goes on to write:

It’s a battle the taxi industry appears increasingly certain to lose. The only questions at this point are how long it will take and what will be left standing in the end. It’s beginning to look like the answers will be: “not long” and “not much.”

Those are fighting words, and Mr. Oremus knows it. His entire article is the perfect example of the kind of lazy journalism that defines click bait.

I’m actually loath to comment upon his gaffe-laden drivel because I know it will only validate his bullshit Chicken Little premonition — You see, I pissed off a bunch of cab drivers. I must be on to something! — but his elitist viewpoint is so offensive, I can’t restrain myself.

No, taxi companies are not failing, just his reading skills.

The reasons why Uber and Lyft are having such a major impact on the earning potential of cab companies are real simple:

Uber and Lyft charge fares that are anywhere from 40-70% less than the regulated cab fares. (Unless it’s surging, of course.)
They don’t have to worry about buying and maintaining fleets of cars or operating clean energy vehicles.
Uber and Lyft don’t have to carry comprehensive insurance that covers drivers, passengers, public and private property, as well as any bystanders who may get hurt in the process. What their sketchy, off-shore insurance company will cover is still very much in doubt since they refuse to accept any responsibility for what happens with their “partners,” who are told to use their own insurance first (and commit insurance fraud in the process as personal policies don’t cover commercial activities). Even if they are in a no-fault accident, they are still required to pay high deductibles to file a claim with Uber’s or Lyft’s insurance companies. ($1,000 and $2,500 respectively.)
Uber and Lyft have no obligation to train their drivers beyond a few short YouTube videos, which emphasize giving out bottled water and snacks to improve ratings, seeing as how their driving skills won’t be doing them any favors.
Uber and Lyft don’t have to pay for city permits, which allow taxicabs the use of taxi lanes and taxi stands. But their drivers just use them anyway. Why not? They work for a company that encourages breaking any law they don’t agree with, so why not act by example? After all, those taxi lanes are super fucking convenient.
When it comes to SFO, Uber and Lyft drivers don’t have to queue with hundreds of other cabs in four parking lots, waiting hours to get to the front of the line to pick up fares. They just wait in the cell phone lot for a ping, drive up to departures and get their fares.
Uber and Lyft also consistently skirt ADA regulations, and by limiting their service to apps, they leave large parts of the population out of the equation.

The playing field between the TNCs and taxi companies is so astronomically uneven it’s criminal. Any sane person can see the lopsided advantage Uber and Lyft have over law-abiding taxi companies. But when you’re a click-hungry journo who only wants to sensationalize an issue, why delve any deeper than the shallow end? Uber is valued at 60 billion and Yellow Cab is in chapter 11. That means Uber automatically wins, right?

Uh, no.

If all Sir Flub-a-Lot knows about the taxi industry is what he hears in the back of some guy’s Prius or on a tech blog, then yeah, I can see how he could easily read about a cab company filing for bankrupcy and immediately jump to the conclusion that all taxi companies are doomed.

There are so many other factors at play here that Oremus is clearly missing due to his prejudice against taxis, and since I don’t have anything else to do this afternoon, let’s examine a few, shall we?

1. San Francisco has more than one cab company. Besides Yellow, the other two large companies are Luxor, who also has their own app, and Flywheel Taxi (née DeSoto). There are also numerous smaller fleets (Citywide, National/Veterans, Fog City, Super Cab, Union Cab, Town Taxi, Green, etc. etc.), many of which are restructuring on their own, moving into hybrid owner-operator models, downsizing fleets and embracing technology to compete with ride-hail services. Even more taxi-hailing apps are going to enter the market. As someone who writes about tech, you’d think Will would appreciate the myriad developments going on in the industry. But no, Mr. Doomsday only has this to say about cab companies’ apps:

If there were ever a time when taxi companies might have been able to leverage their market position to defeat Uber on its own terms, that time has long passed.

Way to be a bummer, dude. But did you know…

2. Uber and Lyft drivers are getting squeezed so tight, they aren’t making any money. Unless it’s surging, natch. But with so many drivers on the road in San Francisco, it never surges like it does in other cities. On New Year’s Eve, the super bowl of ride-hailing, the surge in San Francisco only went as high as 4x the normal rate, while in other cities it went as high as 8.8x.

And now, with the latest rounds of price cuts, Uber drivers are in open revolt. Many are quitting.

How low can Uber set the rates before only the worst drivers with the worst records will be running the Uber app?

Uber is gunning for the lowest common denominator so they can browbeat them into submission. That can’t be good for business in the long run. Throw in a few predatory leasing programs for good measure and you’re on the way to a new form of indentured servitude. Awesome, right?

Oh, Will:

But the fact remains that its business model is far more convenient and congenial to consumers than that of the taxi companies.

Hmm, so you think proudly gouging one’s customers is a solid business move?

I pick up reformed Uber users in my cab all the time. They are coming back to taxis in droves because they have grown weary of confused tourist drivers, the unscrupulous business practices of the bigwigs, surge pricing and just having to deal with an app when there are plenty of cabs available on the street.

…the forces that drove the [Yellow Cab] company to the brink reveals that the ground may be starting to shift faster than almost anyone expected. And it should be enough to unnerve anyone who’s still banking on taxis to avoid the fate of newspaper classifieds, movie-rental stores, or payphones.

3. Cabs are not horse drawn carriages, VCR players or any other ativistic technology people like to compare them to. They are vehicles for hire, just like Uber and Lyft cars. Sure, somebody’s personal vehicle is going to be much cleaner (at least for the first few months) than a taxicab that’s run 24 hours a day, but other than that, the differences between an Uber car and a taxicab are a paint job, top light and a bunch of permits.

Cab companies have to play by the rules while Uber and Lyft cars do not.

Even our boy Will acknowledges this gaping loophole:

Uber and Lyft enjoy different cost structures, fewer regulations, and advanced data analytics, not to mention billions of dollars of venture-capital money aimed explicitly at helping them corner the market without having to worry too much about the bottom line.

But…

Regulation looms.

There are very good reasons why cabs are regulated: to protect the drivers, to protect passengers and to protect society at large.

At some point, Uber will have to be regulated to ensure public safety and workers’ rights. The current exploitative system can’t last forever. Eventually, the numerous court cases against them will go in front of juries and Uber will get bitchslapped into submission.

It makes sense that San Francisco is on the leading edge of the market’s upheaval. The Bay Area’s newspapers were also among the first to hit the skids when the Internet began to disrupt the media.

Dude, take your Adderall. Why are you bringing newspapers into this?

Meanwhile, the New York Times reports, medallions are “barely selling at all” in Boston and Chicago.

Nice segue… (wrong).

4. Now that the streets are saturated with cars looking for fares, most Uber and Lyft drivers are starting to realize what cab drivers already knew: the number of available Ubers and Lyft drivers need to be limited.

The massive influx of Uber and Lyft drivers into the city creates epic gridlock and congestion well past the normal rush hours. On the weekend, it doesn’t end until the bars let out.

One way cities limit the numbers of vehicles for hire on the road is through a medallion system, which are essentially permits to operate taxicabs. This system helps avoid the chaos of too many cars searching for fares at any given time. It also ensures drivers are able to survive during lean times.

Of course, the medallion system is confusing to those who want to peceive it as a corrupt aspect of taxi companies, investor greed or worse…

Mr. Oremus shares in this confusion, based on this statement:

If you’re going to bet on an asset that requires substantial capital outlay, a shiny black car with a leather interior certainly looks more attractive at this point than a little tin plate with a number and an expiration date.

It’s always cute when people who know nothing about the medallion system make grand declarations about it.

But let’s not forget to keep bashing on cab companies:

…they make their money from drivers, who pay them to take shifts. Those drivers are highly sensitive to changes in the marketplace, making them prone to bolt en masse as it becomes clear which way the wind is blowing.

5. Nobody is making very good money on the streets these days. Experienced cab drivers, however, those who have been at this 20+ years, have a better shot at navigating the storm, but for most Uber and Lyft drivers, the situation is very grim.

This race to the bottom is great for the consumers, but horrible for the workers. Realizing this, many Uber and Lyft drivers are signing up to drive cabs.

Can you believe it, Will?

Yes, Uber and Lyft drivers are turning into cabbies.

Crazy, right?

There is much to dislike about the way Uber does business. It has been ruthless and at times unscrupulous in its bid to overthrow taxis and crush would-be rivals as the dominant provider of on-demand rides.

6. Uber’s endgame isn’t the disruption of taxis. They are looking to become the non-virtual Google, where passengers are marketed to while they’re in cars, as well as through the app. Uber is collecting a goldmine of data from users, which they are already using against passengers, though not as blatantly yet.

There are some decent reporters out there who are aware of these developments. Unfortunately, the senior technology writer for Slate is not one of them. He’s still caught up in that whole driverless car smoke screen:

It treats its own drivers as commodities and is actively working to replace them with robots.

7. Self-driving cars are not part of Uber’s business model. Uber has managed to become the world’s largest taxi company without owning a single vehicle, all the while maintaining absolutely no liability for what goes on in those cars. After all, they just connect drivers with riders.

Well, if they invest in buying driverless cars, they will own all the capital, and the corresponding liability. That’s not their business model. In fact, that’s a lousy business model and — ahem — not much different from the current taxi model. I seriously doubt any VC with half a brain would want to invest in a company that plans to replace the current UberX model, which is their most profitable model, with something that would be a strategic nightmare.

At this point, any regulatory crackdowns will only serve to define the contours of Uber’s dominance.

8. So you say, but the day when an elderly couple from Missouri, who’ve saved up for decades to afford vacations to places like San Francisco, arrive at SFO and are required to purchase a smart phone and download an app in order to get into the city is the day we can officially say we have lost all touch with humanity.

There are plenty of people who rue that day. But not writers like Will Oremus, who seemingly loves Uber because it fits into his elistist worldview: like so many people in tech, he wants to force his perspective on the rest of us. Even if his perspective is skewed and fundamentally wrong.

If he can’t see that Uber and Lyft have a temporarily unfair advantage over taxis, which is why they are able to take up so much of the transportation market, then he is either stupid or an asshole. Either way, twisting the facts to meet one’s agenda is akin to the talking heads at Fox News.

Despite what millennials, those who have grudges against taxis and misguided pundits may say, the Uber/Lyft phenomenon is a novelty. It’s based on hype and hype alone, not profit.

Bloggers like Will Oremus play right into this hype machine. He and his ilk are like flies buzzing in our ears. They only want page clicks.

Like the Uber and Lyft feedback system they idolize, they’re after gold stars and high page counts to validate their self-entitled mentalities.

So, in this spirit, I’m sorry to say, I must rate Big Bad Willy’s ability to comprehend the complex world of public transportation one star.

In the Uber and Lyft world, this means we’d never be matched up again.

Oh, I can only hope to never have to encounter more piffle by this click-driven scribe ever again.

(with editorial assistance by Colin, Juneaux and Mr. Johnson)

Marching Backwards into the Next Economy

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[Part of this article originally appeared in my I Drive S.F. column for the S.F. Examiner. This expanded version is from the zine Behind the Wheel 3: From Uber/Lyft to Taxi. To watch the video of the event click here.]

When I agreed to be on a drivers panel for the Next:Economy forum, I wasn’t exactly sure what I was getting myself into. I knew there would be three of us on the hot seat: a cab driver turned Lyft driver, a fulltime Uber driver and me, the Uber/Lyft driver who became a “cabbie.”

Since making it clear to the moderator during our preliminary interview that I was no fan of the on-demand economy, I figured I was there to be the lone naysayer, or to provide some requisite objectivity. Other speakers at the conference included the CEOs of Kickstarter, GE and Lyft, as well as David Plouffe, Uber’s Chief Adviser.

On Thursday morning, I woke up hungover with a mysterious gash in my forehead. After a quick shower, I put on a grey suit, a black shirt and my Florsheims. If I’m going to be a dancing monkey, I should at least wear a shiny red hat.

While on BART, I received word from my friend Maya that her husband had lost his battle with cancer. Even though I knew he’d been fighting the disease for a while, news of his passing hit me hard.

Bill Doyle, who used the nom de guerre Guss Dolan in his activism on the web, was a hero of mine. A major advocate for progressive politics in The City, he railed against the negative changes he saw happening around him as tech money displaced his friends and the new Silicon Valley workers took over neighborhood after neighborhood and threatened his own ability to remain in the city he loved. He spoke at public hearings about the impact of Google buses and rabidly opposed Airbnb and the rest of the so-called “sharing economy.”

I admired his tenacity and ferocious wit. When I started challenging Uber and Lyft, Bill’s encouragement meant the most to me. So while my train barreled through the Transbay Tube, I kept thinking, San Francisco lost a true citizen today.

At the Montgomery station, I climbed the escalator and walked right into the majestic Palace hotel, where the conference was being held. In the green room, I met Eric Barajas, the Uber driver, who, it turned out, organized the protest at Uber HQ in October and is just as disgruntled as I was last year, stuck in a vicious cycle with Uber, barely making enough to survive, but never enough to move on to something better.

While we waited backstage, I watched the CEO of TaskRabbit on the monitor. She seemed to be selling her company to the audience, which I thought was odd. During the Q&A, a woman asked if “Taskers” were being adequately protected from their clients.

Huh?

Who cares about workers these days?

When it was time for our panel, I walked through the curtain into the glare of stage lights. The next twenty minutes were a blur. I just imagined what Bill would say if he’d had the opportunity to voice his dissent at an event like this.

I ragged on all the proponents of the gig economy. Surprisingly, I got laughs. Both Eric and I trashed Uber. At one point, much to the audience’s delight, I got into a heated argument with Jon Kessler, the third driver, who saw the writing on the wall a year ago and leased a car to do Lyft after six years of taxi driving.

Eventually, we were ushered off stage and released into a crowded room of networkers who congratulated us on our lively panel, some comparing it to The Jerry Springer Show.

After talking to several dozen attendees, who paid $3,500 to be there, I realized the conference wasn’t a celebration of the on-demand economy. It was more of an examination of how these advances in technology will impact labor and shape the future of work. Most people I talked to were affiliated with labor organizations or non-profits. I even ran into Steven Hill, whose latest book Raw Deal: How the Uber Economy and Runaway Capitalism are Screwing American Workers rips these on-demand companies a new asshole.

Still, tech was in the air. The CEOs were there to pitch their disruptive technologies and most of what they said was obvious doublespeak. If the future of work means the end of professionalism and less need for workers, what do we do with all these people being born each day? Isn’t this what Marshall McLuhan meant when he wrote about how we’re driving into the future using only our rear view mirror?

Throughout the afternoon, I took advantage of the open bar, sampled the free food and marveled at the vaulted ceilings, ornate fixtures and chandeliers. The combined experience was Orwellian and surreal.

After the conventioneers went to lunch, I wandered down Market Street with Eric and Nikko to get Chinese food by the pound at Lee’s. Nikko is a filmmaker whom I met at an Uber protest the previous year. He was at the convention as Eric’s guest.

Over chow mein and fried rice, we talked about feeling out of place at the convention. As much as these people seemed to like us because of our performance, there was something off-putting about their acknowledgment. It was obvious they weren’t around real workers much, despite claiming to fight for the rights of workers.

Then we discussed David Plouffe’s segment the next day and how great it would be to confront him during the Q&A session that would follow. On video.

Hahaha. We all laughed. That would be awesome!

But wait! Don’t we have badges for the entire convention? They told us we could come back the next day.

The more we talked about it the more we realized this opportunity was too good to pass up. A plan began to form quickly. We went back to the Palace and, in the extravagant lobby, hatched the plan.

After spitballing a bunch of ideas, we concluded that Eric should do the talking. He should just get up and speak his mind. No script. The confrontation would have more of an impact if Eric questioned Uber’s claims of helping working people when working people like himself weren’t able to survive driving for Uber.

Eric was the real deal. He came off as a genuine hard-working parent effortlessly, because that’s who he is. Eric lives in Fairfield. Sometimes, he gets so tired, instead of driving home, he sleeps in his car. When he wakes up, he starts driving again. He doesn’t see his wife or his kids as much as he’d like because he’s too busy trying to fulfill the promise of this “flexible job” to be able to tuck his kids in at night.

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The next morning, I headed into The City. Nikko and Eric were already there, ready to go. After watching a few presentations, including the CEO of Microsoft talk about “augmented workers,” it was time for Plouffe to hit the stage.

There was something surreal about seeing his smug face in person, as he bragged about how Uber changes peoples’ lives for the better, how they’re helping the middle class earn extra money, how the flexibility of driving for Uber is great for people with regular jobs so they can tuck their kids in at night… I resisted the urge to shout rebuttals.

“We’ve onboarded thousands of drivers,” he said proudly. “And in the process helped the environment by taking cars off the road.”

I wanted to scream, You can’t add thousands of cars TO the road while taking thousands OFF the road at the same time! It’s one or the other!

He spoke at length about the independent contractor business model, pointing out that they aren’t the first to use it. And that based on their “research” drivers prefer flexibility over a set schedule.

When asked about disrupting the taxi industry, he said, “That’s not something they even think about.”

When Tim O’Reilly, the moderator, brought up our panel from the previous day, Plouffe evaded the question. He was there to sell an idea and anything that contradicted his narrative was irrelevant. Plouffe is a compelling speaker. His carefully crafted presentation was proof that if you tell a lie long enough and tell it well enough, people will believe it, no matter how much evidence there is to the contrary.

When it came time for the Q&A, Eric got up quickly to be the first in line to ask a question.

“I just wanted to ask how it’s possible Uber is helping the economy when I’m working full time, eleven hour days, six days a week, and I am barely making minimum wage. After all the expenses are factored in, I don’t know whether to pay my phone bill or my PG&E bill.”

Plouffe, slightly taken aback, suggested that he get together with Uber and talk about options…

Eric expressed concern that he would be deactivated for speaking out. But Plouffe assured him he wouldn’t be deactivated for speaking his mind, pointing out that the rating system was only used to determine driver quality. Not for retaliation.

After Plouffe left the stage, everyone wanted a piece of Eric. Champions of workers’ rights and labor reformers wanted him to join their cause. One woman wanted him to speak at a Wal-Mart workers’ rally later in the month.

I faded into the background. Eric is a compelling figure: the perfect example of a hard working family man just trying to survive in the world.

After that, we had lunch in the ballroom. They put out quite a spread. We started off with a Caesar salad, followed by salmon with a tasty lemon and butter sauce, white rice, two asparagus spears and some kind of couscous concoction. For desert, a chocolate tart and a cup of coffee.

Once I’d finished eating, I said what I wish I’d said on stage, but even though I spoke loudly, only the people at our table could hear me:

“A friend of mine died from cancer yesterday. For two days I’ve been listening to presenters tout this new technology that will outsource work to machines and amateurs and all I can think is, find a cure for cancer and then I’ll be fucking impressed.”

With that, I wiped my mouth on the fancy cloth napkin, stood up, walked out of the Palace hotel and took BART back to Oakland.

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The next day, Nikko called to tell me that Eric was kicked off the Uber platform. He was able to log in to the app, but he wasn’t receiving ride requests. He drove around The City for three hours without a single ride.

Unbelievable. Despite Plouffe’s claims on stage, in front of thousands of people, Uber retaliated. Even though several news sites, Business Insider, Fortune and the San Francisco Chronicle, had all written stories about the confrontation, they went ahead and cut him off.

I immediately phoned Eric. He told me that some high level official at Uber was leaving him messages. They wanted him to come to Uber headquarters and “discuss his situation.”

Eric didn’t trust them and didn’t want to go alone. He never returned their calls. He told Tim O’Reilly, the founder of the convention, about what happened and Tim offered to go to the Uber offices with him.

Late that night, Eric went over to Nikko’s apartment. Nikko is also an active Uber driver and they opened their apps next to each other on video. While Nikko’s phone received request after request, Eric’s phone sat idle.

With undisputable proof, the next day, I emailed Joe Fitzgerald at the Examiner. He got in touch with Eric.

Joe contacted Uber. They made some bullshit excuse about a problem with his account, but it was obvious what happened. They’d blocked his access to the app for publically calling them out.

After Joe’s story hit the internet, Eric started received ride requests again.

As if nothing had ever happened.

Pretty fucked up, right?

Well… just like every other negative story about Uber, as soon as the news cycle revolved, everyone moved on to the next routine atrocity…

Still, Eric, Nikko and I all felt a tinge of pride that, even though we weren’t able to hurt Uber’s image, at least we gave them a black eye.

[Images from the Next:Economy panel. Watch the entire panel discussion here.]