So Bloomberg reports that Uber, a so-called Transportation Network Company is worth $10 B. Clearly I am in the wrong business.
This implies that the net present value of all future revenue from Uber minus the costs of that revenue will amount to $10B (assuming they invest the money they raise).
Nationally there are under 250,000 taxi cab drivers who earning a salary of $23,000 apiece, giving a total labor cost of $5.7 B. New York City has about 20% of US taxi cabs and NYC alone serves 241 million annual passengers. Let’s assume 1 billion taxi passengers per year nationally in the US, and $15 revenue per trip. So if Uber captures 100% of the market, there will be $15 B in revenue per year. But that is before labor costs, which are $5.7 B, leaving $9.3B per year. (I am assuming no international profits, since urban surface transportation is highly localized, and why would any other country let a US company dominate?)
If Uber’s gets 100% of this market keeping 10% of remaining revenue for profit margin, they are plausibly worth $10B. This leaves the remaining 90% of that $9.3B to pay for the costs of fuel, maintaining the vehicle, owning the vehicle, and operating a back end app.
Currently Uber has 900 employees. I assume most of them are in the field.
Let’s just say there is a lot of “hope” and “if” in this valuation.
The Financial Times lists companies by Market Value (March 2013). The smallest company with over $10B is Chipotle. Chipotle uses 37000 employees to be worth $10B. $10B is more than Southwest Airlines, an actually profitable airline, was worth. It is about the same size as United Continental.
We have other comparisons – Mastercard is worth $63B. Which would you rather own 1/6 of Mastercard or all of Uber? UPS was worth $62B with 400,000 employees. Do you think Uber with less than 1000 employees will be more valuable than 1.6 of UPS? FedEx was worth $31B with 278,000 employees.
Is this a bad investment for the current investors? That depends. Are there greater fools, or are they at the bottom of this pyramid?
As a somewhat famous person in the field of transportation within Minneapolis, from time to time companies give you products in exchange for reviews. In this case, Lyft gave me a free Lift in exchange for a review. Since I was planning to try Lyft anyway, this seemed opportune. And since I was participating in the Theater of Public Policy, I actually needed a ride from point A to point B, a trip that transit planners agreed was not optimally served by transit, (i.e. there was a 1/2 mile walk or a transfer) and was too far to walk.
Step 1. Download the App. I use iOS, this is easy.
Step 2. Enter the required info
Step 3. Enter the promo code. They said it was for $50, but the app only applied $25 apparently, OOPS. I did however get an email following upgrading me to a “Lyft Pioneer” giving 5 $25 rides in the next two weeks. I guess that’s how I will get home too.
Step 4. Summon a Ride.
Step 5. Get in the Car
Step 6. Tell Driver Destination
Step 7. Ride
Step 8. Get out of the Car.
Step 9. Check App to “Pay Driver”
Repeat 4-9 to go home.
Step 10. Write this review.
The app is straight-forward to use. The only thing missing was for me to enter the expected destinations in the app before drivers “bid” on me, which would seem to better match drivers with where they want to go. On the other hand, that might lead to too few drivers “bidding” on prospective customers. (I am not entirely clear how it works from the drivers perspective, and don’t really plan to become a driver, so am not sure exactly how customers are matched to drivers. I assume some of this is proprietary).
The rides went well. The first driver picked me up within 11 minutes. He didn’t have the pink mustache on his car, but called me on arrival and then I saw which car it was. He took me to my destination with a minimum of confusion (he had 3 GPS systems in the car, two on smart-phones and one built in). The bill was $17 (UMN to Bryant Lake Bowl), though as noted, I had Lyft Credits already. He was doing this while (temporarily?) unemployed. His vehicle was quite nice, including a back massager in the front seat. (With Lyft it seems customary to get in the front, in contrast with Taxi 1.0, where the paying passenger sits in the second row). We chatted a bit. He says he started recently and does this part time, for about 4 passengers a day, though it is not very profitable for him. (And given his car and previous line of work, I imagine not).
At the end of T2_P2, I summoned a second driver from Lyft, who arrived within 2 minutes. I was also texted when he arrived, though I identified his car, which did have the mustache. He does this a few hours a day between his main gig which is in the catering field and thus sporadic. He has been doing this since last fall when Lyft started in St. Paul. From Bryant Lake Bowl to Prospect Park was $14. I received receipts in my inbox almost immediately. My donations to the drivers were automatic.
Without making any broad social statement (though readers are free to infer), the racial composition of Lyft drivers is noticeably different from the racial composition of Taxi 1.0 drivers in Minneapolis. Since moving to Minneapolis I believe I have had 1 white (immigrant) taxi driver, while both Lyft drivers were white.
Lyft is just an app with a back-end dispatch service. They claim to be a ” transportation network company whose mobile-phone application facilitates peer-to-peer ridesharing by enabling passengers who need a ride to request one from drivers who have a car.” They insist the drivers are independent (as are the riders). The difference between this and a taxi dispatcher is thin. Google says a taxicab is:
a car licensed to transport passengers in return for payment of a fare, usually fitted with a taximeter.
So for taxicabs, the arrangement between the rider and the passenger is mediated by the government (which licenses the vehicles).
Are Lyft drivers licensed to transport passengers for payment? No, they are licensed drivers, and any licensed driver (above a certain age, level of experience) is eligible to carry passengers. The cars are private cars (at least sometimes) though that is little different than how taxis operate in other parts of the world. I am told many Singaporean taxi drivers will take fares when going between where they are going anyway, but otherwise treat the taxis as a personal vehicle. Lyft passengers “donate” to drivers (like a tip, although it is more or less automatic). I guess voluntary payment differs from contractual payment legally, sort of, kind of. The courts will decide. Lyft does insure its drivers, which makes this even murkier.
Also, here is a $25 discount code for you if you want to try it yourself: “TRANSPORT” (valid only for new users)
I don’t think Lyft yet does jitney (shared taxi, dollar van, informal transport) type services (which undoubtedly they would spell Jytney … register that domain now kids). These would serve either one pickup going to multiple destinations, or multiple pickups going to one destination, or multiple origins to multiple destinations, and would begin to compete with public transit. (Though it would not be exactly fixed routes, one could imagine regular runs with a known coterie of passengers). Presumably this would be at a lower rate.
I have not yet tried Uber. I may use Lyft again from time-to-time. At $30 or so round-trip within the city, it is more expensive than driving and parking when I have a car at my disposal, and certainly more expensive than transit, or car2go and may be comparable to taxi. But if I am without a vehicle, or someone else is paying, it is a nice option to have.
Eric Jaffe at Atlantic Cities, commenting on the BART strike, writes: No, Ride-Sharing Is Not the Death of Public Transportation: “Work from Columbia University scholar David King and others has supported the role of taxis as part of a multi-modal travel network that does not involve a private automobile. Their data of taxi movement in Manhattan neighborhoods found that a majority of these trips were late-night origins — meaning riders must have arrived there by some other mode earlier in the day, with this mode obviously not being a single-occupancy car. King and colleagues write:
In many cases taxi trips are part of journeys that began with transit trips, yet planning and expanding taxi service as an extension of transit networks is rarely undertaken in practice.”
“When you go to most cities, there are many different taxi providers and it’s hit-or-miss how reliable any of them are,” said David Levinson, a professor at the University of Minnesota who studies transportation. “It’s easier to download an app than to look up a telephone number.”
“NYE pricing is not for the faint of heart. The average surge multiple will likely be 2x normal prices, but during extreme spikes it could cost you $100 MINIMUM before time and mileage charges! So be careful with those Uber ride requests. Uber rides will be reliable on New Year’s Eve, but they’ll also be pretty pricey.”
The more of this and *not* having road prices vary by time of day will seem strange. We should just use the words “surge pricing” rather than “road pricing”.
Taxis are an essential feature of an urban transportation system where travelers must go from point to point but lack automobiles. This mainly occurs in two situations: first where travelers do not possess a car, and fixed route transit is nonexistent or inadequate; second, where travelers are coming from out of town, and do not wish to rent a car, or did not want to store one at the airport or train station. Taxis complement transit in an urban environment, and a fleet of taxis is indicative that one can survive without private vehicle ownership. The convergence of (driverless) taxis and carsharing with autonomous vehicles is my vision of the future of urban transportation in the mid 21st century.
Taxi drivers in some cultures are held in high esteem. London taxi drivers must learn “The Knowledge”, before getting licensed, which allows them to deliver travelers safely to any location in London without consulting a map. The Knowledge has been required since 1865, and typical drivers practice for 34 months and take the test 12 times before passing. It has been shown the hippocampus, the part of the brain associated with navigation, is larger for London cabbies than the average person.
In Minneapolis-St. Paul, it is clear that airport taxi cab drivers are required to lack The Knowledge about the street network. Actually knowing where things are must be disqualifying. The only qualification is that one arrived at the airport yesterday oneself, without transportation, and in exchange for volunteering to drive a cab, they let you. The only locations airport cabbies know are downtown Minneapolis, (which I can reach by transit), and perhaps St. Paul. The only roads they know are limited access.
I have yet to meet a cab driver who knows where Southeast Minneapolis or Prospect Park is. I have yet to meet a cab driver who can find my house without a long set of directions or resorting to a GPS system that requires the use of freeways (doubling distance, and greatly increasing fare) without saving any time. I have yet to meet a cab driver who has been on more than half the streets I use to get home. The most recent 2 out of 3 didn’t know where Cleveland Avenue was. (One intelligently asked which city, as Cleveland discontinues into Roseville, though I am not sure that’s why he asked.)
If I land during the daytime, I try to take transit, where at least the extra distance comes without extra cost and without my having to give directions. But when I land at night, transit is not a practical option (off-peak, the nearest operating bus stop is about 1/2 mile away, despite living in the city).
I do have a regular cab driver, who is quite good, who takes me to the airport at odd hours. He is not allowed to pick people up at the taxi stand, that is a separate class of taxi. (He can pick people in the regular pickup area). I don’t want to hire him from the airport since I don’t know in advance when I will land, given the vagaries of air travel.
I don’t envy the life of a cab-driver, waiting in a car all day, for a few round trip fares. But that is the life they chose.
I question the licensing of taxis in such a way that (1) Knowledge is not required, or (2) Knowledge is not rewarded (i.e. it cannot be used as a competitive feature). If you want to allow fresh-off-the-airplane immigrants to drive cabs, fine, so long as they don’t kill people. However if someone actually knows the network, they should be allowed to use that as an advantage in recruiting customers. One imagines they take a test like The Knowledge, customized for the Twin Cities, and can post their scores in their window. I can go for the smart cabbie and pay a higher per mile rate, but have a shorter time, or go with the new cabbie at a discount. Instead, the airport taxi whip routes travelers to taxis in a first-come, first-serve process where taxis are assumed to be identical commodities (differentiated only by the size of the vehicle).
If we hope to have a world-class city, we need world-class taxis.
“Continental Automotive, a company that makes tires and other parts, has put together a semi-driverless car for Nevada. Under the rules in that state, which legalized driverless cars last year, a car must successfully go 10,000 miles without an accident before being marketed in the state. Continental’s car, which is based on a Volkswagen Passat, should pass that mark this week.”
“The Evacuated Tube Transport (ETT) system (U.S. Patent 5950543, assigned to ET3.com, Inc.) would take passengers from New York to Beijing in just two hours. Advocates of Evacuated Tube Transport (ETT) claim it is silent, cheaper than planes, trains, or cars and faster than jets.
How it would work: put a superconducting maglev train in evacuated tubes, then accelerate using linear electric motors until the design velocity is attained. Passive superconductors allow the capsules to float in the tube, while eddy currents induced in conducting materials drive the capsules. Efficiency of such a system would be high, as the electric energy required to accelerate a capsule could largely be recaptured as it slows.”
“One of the neat things we can do with our data is ask about rider patterns: are there weekend riders that only use Uber post-party? What about the workday commuters who use us every morning? It was while playing around with this idea of (blind!) rider segmentation that we came up with the Ride of Glory (RoG).”