I love using Uber.
When you get into a taxi in Germany, it’s almost always a new Mercedes, BMW or Audi, generally the large model, and spotless. The driver is well-dressed. The ride is superb. And then you pay a LOT OF MONEY.
When you get into a taxi in the United States, say New York City, the car is usually beat up, no more shocks left, the seat is often torn and the cushions disintegrated. The cab is filthy. The barrier separating the driver from me is too close and my legs bump against it. There is less leg room than in a Spirit Airlines flight. The driver speaks no English. He can’t take a credit card, because “the machine no works” and I am still expected to tip. Since I deal with cash, the tip is too much in the end. The receipt is usually a dirty business card where I have to fill in my own data. All that, if I can FIND and HAIL a cab in New York City in the first place.
I go to my app, and within a few seconds a driver accepts my hail. I see the map and the car coming. I know the name of the driver, the type of car, and the license number ahead of time, so I can look out for him. Within minutes he pulls up. I get in, and the driver greets me by name, and he already knows where I am going. The car is clean, he hands me a bottle of water, we chat pleasantly, if I want to, and he drops me off. I see the fare pop up on my phone, and it’s very reasonable. I love that I don’t have to hassle with a tip. The driver is his own contractor/boss/service business. I rate the driver 5 stars. Within minutes, I have an easy-to-read receipt in my email that I can use for my expense report if I am on a business trip. It does not get any slicker than that.
From the consumer’s point of view, the business model makes perfect sense. Here is a service industry that is putting the taxi business out of business.
The way I see it, Uber should not exist. The taxi companies should have created the app years ago and streamlined their business to be consumer oriented. There should be a checkered-cab-app. But there isn’t.
- Just like Google should not exist, because the dominant search engine at the time was Yahoo!
- Just like Amazon should not exist, since Barnes & Noble, Borders, and Waldenbooks owned the market and should have gone online.
- Just like Instagram should not exist because Kodak could have created it 10 years earlier.
- Just like FedEx should not exist, because the U.S. Postal Service owned the mail and shipping market.
- Just like Apple should not exist, because IBM was the behemoth of computing, and DEC was the upstart minicomputer giant.
But, alas, Uber exists because the taxi business sucks so badly and they created a much better mousetrap for a huge demand.
If you have ever wondered about the inner workings of Uber, how much money (or how little) the drivers make, and how it all works, read this superb article by Emily Guendelsberger in the Philadelphia Citypaper. It’s very long, but it’s exhaustive and serves as a great exposé.
After reading this article, it is clear to me that Uber is meeting a phenomenal demand left by the crappy taxi industry, that, with its bad business model, trashy service, inconvenient hailing system, and poor financial management, not to mention the outdated protectionist medallion system, is not able to cope very well with competition that is focused — what a novel concept — on the consumer.
Uber has to deal with the issue of commercial licensing and insurance. Uber has to deal with unionization efforts of their drivers. Uber has to take better care of its drivers, or some other company like it that does will gobble up those drivers eventually. But Uber definitely is focused on the customer, the consumer.
In summary, Uber (and its competitors) are an American service industry addition that was not there some years ago and has become a huge business because there was a gaping need. Its drivers are not making a living wage for the most part, but its customers are happy and well-served. Regulatory agencies and insurance companies need to catch up with “the problem” this industry created, but they eventually will.