Monday, October 20, 2014

REPOST: Über succeeds where taxis fail

Saturday, April 14, 2012

Über succeeds where taxis fail

Almost all the everyday complaints about cabs trace back to bad regulation
Drivers won’t take you to the outer reaches of your metropolitan area? The regulated fares won’t let them charge you more to recover the cost of dead-heading back without a return customer. Cabs are poorly maintained? Blame restricted competition, and the inability to charge for better quality. Cabbies drive like maniacs? With high fixed costs for cars and gas, and no way to increase their earnings except by finding another fare, is it any wonder that they try to get from place to place as fast as possible?

Über is a better way to move assets to higher valued uses

Uber makes its money at least in part by alleviating these inefficiencies. In most places, “black car” or livery services are regulated differently, and more lightly, than taxis are. Though Uber has good reason not to say so, it’s basically turning livery services into cabs. The company is one step further removed from regulation, because it doesn’t run cars itself; it funnels passengers to existing services. “We’re sort of like an efficient lead-generation system for limo companies,” says Kalanick, “but with math involved.”

Predictably, the old technology asks the government to regulate the new technology
The commission has also launched a public fight against Uber. In January, Chairman Ron Linton declared that the service was “operating illegally” and personally led a “sting” operation, impounding the car of the unlucky driver who had dropped him off at the Mayflower hotel in front of a waiting reporter. Linton followed up with an op-ed in The Washington Post, insisting that Uber was unlawfully charging for time and distance. Uber’s defenders pointed out that D.C. limo regulations define “sedans” as “for-hire” cars that charge for service “on the basis of time and mileage.” Linton now says that

HT: Brock


  1. Über is yet another idea which was not built for the U.S. system of business. Our system of regulated inefficiencies has built-in protection systems which are led by lobbyists and unions. Our issue has never been than no single person figures out a better and or cheaper way to accomplish common tasks. The more efficient methods seem to involve cutting out the middle-men.
    In my recent text reading on pricing, we have always worked from demand and competitive angles. Working from a cost angle ensures that we are not taking losses to build a customer base. Another important strength is that the demand base is stronger and more loyal. This inelasticity of demand allows Über customer to rely on a pricing system that is best for their customers.
    Über will seem God-sent in the short-run. Perception will definitely start changing when legislation has fully taken over. The middle-men will use this opportunity to ensure that insurance, signage and taxes are adjusted for the ‘class’ under which Über operators make their runs.

  2. Your post about Uber is a perfect example of competitive positioning within an industry. In this case, there was a demand for reliable transportation that wasn’t being met by the current options in the industry. Taxis weren’t providing desired services for all of the reasons outlined in your post. Public transportation was subject to scheduled departure and arrival times, and only traveled to and from specific destinations. Driving isn’t always a feasible option. Therefore, there was a need for reasonably priced, flexible transportation that could be provided simultaneously for many people. Uber was able to meet this demand and occupy this niche market. Not only was Uber able to supply the desired transportation, but they’ve been able to be profitable doing it.