August 17, 2015 • 42 mins
How did Uber get started? What are some of the controversies around Uber? And what's in store for the future?
Learn more about your ad-choices at https://www.iheartpodcastnetwork.com
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:04):
Get in text with technology with tex stuff, Chrome host
ft dot Com. EI there, and welcome to tex Stuff.
I'm Jonathan Strickland, and today we're going to look at
the Uber story, story about the company Uber, not an
Uber large embank story, although I guess it's that too.
(00:27):
Now this is gonna be part one. I've already recorded
Part two, Peek behind the Curtain brought Scott Benjamin in
for a little discussion about Uber and Uh. It ended
up being so long that it had to be its
own episode. I was originally just gonna kind of tag
it onto the end of this one, but you can
listen to the next episode to hear Scott's ideas about
Uber and autonomous cars and a fleet of vehicles that
(00:50):
take you places without any human drivers. But for this episode,
I really wanted to look at the story of Uber itself,
not its future, but it's past and up to the present.
So to look at how Uber came about, you have
to go back to two thousand eight. That's when a
pair of entrepreneurs named Garrett Camp and Travis Kalinnik began
(01:11):
to talk about a way to make it easier to
get a taxi in San Francisco, world's turn upon such
thoughts bloom So. Camp was a co founder of the
web discovery platform stumble Upon. So, in case you've never
used it, stumble Upon is a web discovery tool. Let's
users share web pages, you can rate them, and it
(01:34):
also a lots lets you discover other web pages and
photos and videos and other web related content that your
friends liked. It's sort of a curation engine, so the
idea is that it helps you discover stuff related to
your interests. So it's kind of like a search engine,
but it's always on the lookout for things that you
might find interesting, so kind of a baby step towards
(01:56):
the semantic web, but it's largely dependent upon other people
tagging that information. In May two thousand seven, eBay bought
stumble Upon for seventy five million dollars. So in two
thousand and eight, there's Camp sitting around thinking about what
he's going to tackle next. He's still CEEO of stumble Upon,
(02:17):
but you know, he's also flush with cash, and by
the way, he would go on to buy stumble Upon
back from eBay in two thousand nine along with a
few other investors. Meanwhile, you've got Travis Kalenik, who had
dropped out of the computer science program at u c
l A to found a company called Scour Incorporated. That's
s c O you are, and that was a multimedia
(02:42):
search engine. He also created scour Exchange, which was appeer
to peer file sharing service. Uh, peer to peer file sharing.
I'm sure you guys remember, But this is a method
of transferring large data files quickly by creating a network
of peers, all of whom are either hosting part of
(03:03):
or an entire file large file, and they make that
available to other peers in the network to download, so
it speeds up the downloading process. And this is not
necessarily a means to get illegal content like works that
are protected under copyright and in other words, it's not
necessarily a way to pirate stuff. But it has been
(03:24):
used to pirate things, and so a lot of people
equate peer to peer networks with illegal activity. That's just
not true. It's just a means of distribution. It's kind
of like saying a road would be illegal because someone
was driving something illegal in a car, or that the
car itself is illegal. That's ridiculous. Obviously. However, it has
(03:45):
meant that certain industry organizations like the m P A
A and the r I Double A have come down
on these companies and threatened them with enormous lawsuits for
allowing such things to happen. Uh. The d m c
A says that it gives you know, safe harbor to
(04:05):
two companies that host these services as long as those
companies take pains to remove or prevent piracy from happening uh,
and then they're they're protected. But the r I Double
A and the m P A and a couple of
other organizations all filed lawsuits against scour and so the
company declared bankruptcy in September in anticipation of those lawsuits
(04:29):
coming at them and kind of dissolved. Kalin Nick would
then go on to start other companies. The next one
was called red Swoosh, which was another peer to peer
file exchange service, which was eventually acquired by a Kami
Technologies or Akamai Technologies in two thousand seven for nineteen
million dollars. So both call Nick and Camp we're doing
(04:51):
pretty well for themselves. When they met up to talk
about a way to leverage the Internet and mobile devices
to make it easier to hail a cab to get
a taxi in San Francisco, and actually in the very
beginning it was a bit more elitist than that, according
to some reports. Anyway, The story is that Camp and
call Nick were in Paris for the low Web conference
(05:15):
and the two began to moll over what a pain
in the patook as it is to hail a cab
in San Francisco, particularly when you're loaded down with luggage.
So they started talking about collaborating on a particularly private venture.
They began to wonder if it would make sense for
them to go in together and purchase a Mercedes S
class vehicle and hire a personal driver and get a
(05:38):
parking spot in a garage that would be geographically equa
distant to their individual houses. In other words, at first,
they were just talking about sharing a personal driver and
a car, so kind of like an uber just for
the two of them. But this conversation evolved into the
idea for a mobile app that would allow you to
(05:58):
put in a request for a dry her and a
service of drivers capable of responding to such a call.
So Camp would go on to work on that idea
in his spare time, and he actually produced a prototype
app in March two thousand nine, at the time, he
was calling it uber Cab. Now Camp actually hired Kallinik
to become the full time custodian of uber Cab. So
(06:21):
Camp was still being busy as the CEO of stumble Upon,
and it was Kalenik's job to take this initial prototype
app and develop it until it could launch as a
real service, with the aim of launching it in San Francisco.
In January two tho the service was ready for a
test run and it was about as alpha as you
can get. There were only three cars and they started
(06:44):
in the city of New York City, so three cars
in New York City is a tiny test run of service.
In March two thousand ten, Uber would hire Ryan Graves
to become the general manager of the company. And this
is a pretty funny story all on its own. Kalinnik
actually posted on Twitter that he was looking for a
business developer and he said that there would be big
(07:07):
equity in a pre launch product. So Ryan Graves responded
to the tweet and send a Twitter message of his
own that said they should email him, and they and
he gave his email address over Twitter, and I guess
things worked out because they hired him. Now. Ryan Graves
had been working at General Electric and had described his
position there as being quote unquote unglamorous and not really
(07:32):
any room for him to to advance in his job,
at least not that he could see. He had also
served as an intern for four Square and apparently it
kind of just wheedled his way into their depending depending
upon whose account you believe, and he would eventually become
the CEO of Uber for a short while before Kalinnik
took over that position and Graves would become involved in
(07:55):
the global development of the company, so his focus began
to be um really directed at getting Uber into various
cities around the globe. But a very successful hire, and
it's funny that it happened over Twitter. In July two
thousand ten, Uber would hit the streets of San Francisco.
(08:15):
Uber Cab was being called an on demand car service
via the iPhone. There was no Android app at this point,
and at this stage the service already used the phone
to determine your location and to send a driver to you,
or you can use the map within the app service
itself to indicate an exact pickup location that your driver
would go to. Now, drivers in the area would be
(08:36):
alerted to your request, so when a driver accepts your request,
that request goes off the list, so that way you
don't get multiple drivers all responding to the same request.
The driver who accepted it then heads your way to
pick you up and take you to your destination, and
you can rate the driver, and the driver can also
rate you too. You can give a review and the
(08:58):
driver can review you, so users who have low ratings
might find that they aren't getting rides as easily as
other people. In other words, it pays to be nice
to your driver, or at least not to be obnoxious
and disruptive. In October, Uber Cab received a one point
to five million dollars in an investment round, and that's
(09:21):
also when the company would drop the cab from its
name and just become Uber. But the company also got
a cease and desist order from the Public Utilities Commission
of California, and the reason was because the organization accused
Uber of acting as a cab company without the proper
licensing to do so. In other words, Uber was performing
(09:43):
a service that was identical to that of taxi cabs,
but not having to obey the same rules that taxicabs
did so for the time being, Uber had to be
put out of commission in San Francisco uh In November
twenty Uber becomes available for Android device, and in February eleven,
the company would receive eleven million dollars from another round
(10:06):
of investments. A few months later, in May, Uber would
go live in New York City. In September eleven, Uber
landed itself in some hot water with journalists. It was
revealed that Uber has a sort of overview of the
entire system within a region, and some people were calling
it the God view. It shows the names and locations
of all the Uber users in that area. So remember
(10:29):
Uber is using the location data of your phone and
then broadcasts set to Uber so that drivers can find you.
But that also means that the system knows where you
are when you are using the Uber app, So if
you were able to access this view, you can see
where all the Uber users are in that area. It
(10:50):
was meant to be an internal tool, but they did
start showing it off in a party at Chicago, and
that really started off some trouble. Also, one Uber executive
apparently sent a message to a journalist who requested an
Uber ride so because the Uber executive executive could see
where the journalist was and how the journalist was active,
the executive sent a message saying, hey, won't you write
(11:11):
a story about Uber. Essentially, they were using the god
view to keep tabs on the journalist and that kind
of backfired. UH. That seemed to be a violation of privacy,
and since then Uber has said that it has placed
strict limits on who can view that particular data. So
this is not something that people can easily see now,
(11:32):
at least according to Uber. And Uber got another shot
of investments in December eleven. They raised thirty seven million
dollars and also launched service in Seattle, Boston, Chicago, Washington,
d C. And Paris. So they launched service in the
city where the idea for Uber was first born. In
(11:54):
April of twelve, Uber launched Uber x and that's what
allows people to become Uber drivers using their own personal
vehicles at a lower rate than what you'd find with
a taxi or with other Uber services whey're using black
cars or SUVs or other upscale vehicles. The company also
launched a feature in which you could use Uber to
(12:15):
hail an official taxicab in markets like Chicago. So in
some markets you can use Uber to get a regular
cab uh and uh instead of an Uber driver, and
in some markets that actually makes sense. I'll talk more
about that in a second. In November twelve, Uber caught
some flack for its surge pricing, which had been an
(12:36):
issue already. Surge pricing was really Uber's way and still
is Uber's way of managing the balance between supply and demand.
So if demand is really high, surge pricing kicks in
and the price for Uber services goes up as well,
at least until the supply ends up coming closer to
the demand. In other words, if the demand is really high,
(13:00):
surge pricing goes up. Other Uber drivers might end up
entering that area in order to take advantage of that
surge pricing, because Uber drivers make more if the prices
are higher. But as supply ends up meeting the same
as demand, then the prices come down. It's very much
reactive to that. Well. During emergency situations, the demand can
(13:23):
be very high and supply can be very low, and
that can end up creating a difficult and sometimes um
well certainly discriminatory pricing in the wake of pretty awful situations,
one of those being when Hurricane Sandy hit New York.
It was a very severe weather pattern that moved through
(13:46):
and hit New York much harder than anyone had anticipated,
and as a result, surge prices went way up in
New York after Sandy was moving through. Now Uber responded
by waiving the surge pricing for aids in the wake
of Sandy, and they also let drivers take home the
entire fair. Now Uber usually takes a commission off affairs.
(14:09):
Typically in the early days it was something like twenty percent,
meaning the driver would have eight percent of what they
made that day and the other twenty percent would go
to Uber. That has actually changed over time, and I'll
get to that in a little bit. Around that same time,
in two thousand twelve, late Uber was fined twenty thousand
dollars by the California Public Utilities Commission CPUC, in other words,
(14:31):
for operating an unlicensed taxi and limousine dispatch service. Those
fines would never be collected upon because Uber and the
Commission would strike a deal in early allowing Uber to
operate in California in return for following certain regulations. In
the summer of the rival service, Lift was starting to
(14:52):
get in some serious attraction. They were really starting to
take off. Lift had been around since twenty twelve, and
Uber had also had to face a battle on many
fronts as various cities and regions began to react to
its business model and you know, protest moving into those markets.
The company at that time was valued at three point
seven billion with a B dollars. In September, California would
(15:18):
become the first state to regulate what is called ride
sharing services. Here's where I take a moment to say,
I don't like the idea of calling these ride sharing services.
I think of ride sharing services as a means to
allow people to car pool. In other words, so if
I'm going to a concert maybe and I say, hey,
(15:39):
I'm going to this concert. I've got a card seats
about twenties, so come along and bring your jukebox money,
people can put in an app saying hey, I'm also
going to that concert. Can you pick me up? And
if it's on my way, I can do that. I
think of that as ride sharing. You are literally sharing
a ride, whereas with uber x you are using your
own personal vehicle. If you're an uber x dry, where
(16:00):
you're using your own car to drive people around. That's
not really ride sharing. It's still kind of more like
hailing a cab. It's just in this case it's not
a cab. It's someone's personal car. But it's not ride sharing.
I would argue, in fact, I think this whole share
based economy is a misnomer. But that's an episode for
(16:20):
another time. At any rate, California passes rules in two
thousand thirteen in September that require Uber drivers and other
drivers drivers of other services that are similar to Uber
to undergo a criminal background check, They have to pass
a training program, they have to obtain a permit from
the CPUC before driving for any of those companies, and
(16:42):
the companies themselves have to offer insurance coverage of the vehicles,
and that put Uber closer to the level of taxi service.
And in addition, the CPUC demands one third of one
percent of the total revenues as fees. UH the various
cars are his companies saw this as a victory, the
(17:03):
ability to have a legitimate claim to operating in those
environments now. The following month, Uber made a deal with
a few auto manufacturers like Toyota and GM, and also
with auto financing companies to make it easier for prospective
Uber drivers to get favorable financing rates on vehicles when
(17:25):
purchasing a car. So this was a strategic move on
Uber's part to attract more drivers to work with the
service because they were seeing escalating demand in various markets
and that meant that surge pricing was hitting all the
time because there weren't enough drivers to meet that demand,
and that meant that the people who were asking for
(17:45):
rides were getting these crazy surge prices tacked on, and
they didn't like that. They didn't want to take the
they didn't want to use the service because why use
a service that's so much more expensive than just taking
a cab. So there was a real incentive on Uber's
part to get more drivers into these markets in order
to meet the demand that was already there. So they
(18:07):
ended up making these partnerships, and Klinik said that a
fully utilized vehicle on Uber would grows more than a
hundred thousand dollars per year. Later estimations had at a
lower rate, but at this time he said about a
hundred thousand dollars per year if it was quote unquote
fully utilized. What that means I don't know, I imagine
(18:28):
at least forty hours a week. But using that information
and coming from Kalinnick himself, UH, the car financing companies
in the car manufacturers were able to leverage and or
able to look at better deals for prospective Uber drivers.
So if you wanted to drive for Uber and you
went forward trying to purchase a car this way, you
(18:50):
would actually get really favorable rates. And klin Nick estimated
that the preferential rates would actually result in a hundred
to two hundred dollars in savings on car ements per month.
So having less to pay was a big incentive if
you were already thinking about driving, and keeping in mind
that these Uber x drivers are using their own vehicles,
(19:11):
they have to purchase those vehicles and maintain those vehicles,
so this was a necessary incentive. In March two thousand fourteen,
Uber announced an insurance plan that would cover drivers when
there are no passengers in the car, and this would
be an extension of personal coverage that drivers were already
required to have in order to be an Uber x driver,
(19:33):
So this was to kind of add a little more
protection to those drivers. This this was in the wake
of some pretty tragic circumstances where an Uber driver struck
and killed a pedestrian. Very tragic story, but Uber had
maintained that the the incident when it happened, the Uber
driver was not carrying a fair nor was the Uber
(19:55):
driver responding to a fair request at that exact moment.
In May two thousand fourteen, Travis Kalinnik spoke at the
CODE Conference and revealed Uber's long term plan is to
switch to autonomous vehicles, which we mean they would replace
human drivers, the cars would drive themselves. He talked about
(20:15):
the future in which car ownership would be increasingly rare,
particularly for dense urban environments, and in those places, instead
of owning a car, you just call for a car
whenever you needed one, and it would arrive within thirty
seconds and then take you to where you're you needed
to be efficiently and safely, and you wouldn't need a
space for your own car, because why would you ever
(20:36):
own one. You you could have that space set aside
for something else, And cars usually sit idle like nine
percent of the time. You aren't in your car that
frequently in the grand scheme of things, So why would
you pay for something that you only use ten percent?
Of the time you own it and you have to
pay for the place to keep it, especially if you're
(20:58):
in a living in a place like New York City,
where the payment for a car parking spot might be
the same as an apartment in other parts of the world.
So it's a pretty powerful argument. Uh. It also suggests
that Uber is not terribly concerned with what their drivers
think of the the company in the long term, but
(21:18):
the public image of Uber has been something of a
problem area for its entire existence. Anyway, This only makes sense, obviously,
if the amount you would spend on car rides through
the service would be less than what you would spend
on the ownership and maintenance of a vehicle. So I
(21:39):
guess in the very long run, if you were to
keep a car for a very very long time, then
you could argue that the personal car ownership makes more
sense because you are getting the most out of that vehicle,
and that's less common today than it was twenty years ago.
So I don't know that you can make that argument
as effectively today at any rate. Klan Nick says the
(22:00):
real reality of such a day is quite a long
ways off, but it is inevitable we will get there.
And this address that he gave at the CODE conference
came not long after Uber had released a report that
claimed Uber drivers would make much more money than cab
drivers would now. According to that report, a cab driver's
salary was around the thirty thousand dollar per year mark,
(22:22):
and Uber said the median wage for a New York
based Uber x driver who works at least forty hours
per week is ninety thousand, seven d sixty six dollars
per year. In San Francisco it was seventy four thousand
dollars per years. So obviously the amount you make was
relied heavily upon where you actually work, and that doesn't
(22:45):
factor into account the expenses the driver would incur in
owning and operating and maintaining that vehicle. So those those
figures don't indicate like how much did the car cost,
how much did it cost to fuel the vehicle or
park the vehic goal when you weren't using it, or
just take it in for tuneups. None of that is
factored into that that revenue, so keep that in mind too.
(23:08):
In June two thousand fourteen, Uber announced another round of funding.
In that time, it was truly huge, as in one
point to billion dollars, and at that point the company
was valued at seventeen billion dollars, so definitely on a
stress spurc rise and we're not done yet. In August
two thousand fourteen, that's when we had the the publication
(23:33):
of all the stories of the great Uber versus Left war.
So during August we started seeing lots of reports of
one side accusing the other shenanigans. Most of the accusations
were from Left against Uber and had the added up
of internal memos to support the allegations. Left executives accused
(23:56):
Uber of running a campaign designed to sabotage lifts operations.
So the accusation said that Uber drivers had been using
Lift to call for rides and then to cancel them,
which would tie up drivers and make them frustrated as
they failed to get fares. At the same time, Uber
was accused of beginning a campaign to lure lift drivers
(24:18):
away from Lift to work for Uber instead. Now Uber
claims that lift drivers were also calling and canceling rides,
and in greater numbers than the other way around, And
the fight got really super ugly. And it's not exactly
done yet, but boy, that was some nasty press that
came out at during that time. Also in August, Uber
(24:42):
hired David Pluff and I'm probably butchering his last name,
but as a lobbyist to help push for favorable changes
in regulations and laws that could give Uber a place
in the market. He had formerly been a campaign manager
for President Obama, so it was very well versed in
the world of politics. In November two thousand fourteen, Emil Michaels,
(25:04):
who was a senior vice president still is at Uber,
suggested digging up dirt on journalists who published stories that
are critical of Uber. In other words, he seemed to
suggest using blackmail to silence critics, and kalin Nick would
eventually apologize for Michael's remarks, but he wasn't fired or
demoted as a result of them, which made a lot
(25:25):
of people really angry. By the end of two thousand fourteen,
Uber was valued at forty billion dollars, so twice as
much from the previous year. Uber is also banned in
Spain and Thailand, the reason given that the service is
unfair to other businesses, the taxi business in other words,
(25:46):
and Holland would ban Uber Pop, which is the UH
the European version of Uber X, but Holland would continue
to allow other versions of Uber to operate within the country. Portland,
Oregon sued to shut down Uber when it launched there,
because of course it did. In December fourteen, and Uber
(26:07):
driver was charged with kidnapping and raping and Uber customer,
which absolutely horrifying story. And this isn't the only instance
of an Uber employee being accused of something so heinous
as as rape. It's unfortunately happened a few times. At
least the charges have been levied a few times. UM.
(26:27):
A Florida driver was charged with assaulting a female passenger.
There were a couple of instances in Chicago, one in
which an uber x driver was accused of sexually assaulting
a female passenger, and a different Uber x driver in
Chicago was charged with sexual assault UM in January for
attacking a male passenger. Also in January, a criminal trial
(26:51):
began for an Uber driver in India who was accused
of rape, and in February, a Boston driver was charged
with indecent assault and battery. So partially as a response
to the driver assaults on passengers, Uber institute a measure
that was found originally in the Indian version of its
app uh this was a panic button that they they
(27:14):
enacted in Chicago. That panic button alerts police if the
writer feels threatened while inside the vehicle. They also announced
that they were going to institute much more um strict
criminal background checks before hiring on any drivers. So this
has been an incredibly negative story, obviously for obvious reasons.
(27:37):
You never want to have a company that's a service
oriented company putting customers at risk, clearly, and Uber has
been you know, responsive to it. But there have been
a lot of critics who said that the company has
not done enough, nor has it done it quickly enough,
nor has it been responsible because this should never have
(27:58):
happened in the first place. So again Uber's public image
is taking a beating. Wouldn't be the last time. In February,
Uber revealed that a hacker had gained access to its
database in sometime, but it was waiting until reveal this
information really as part of the investigation that the company
(28:20):
needed to be quiet. The database contained the names and
driver's licensed numbers of around fifty thousand Uber drivers, so
potentially the hacker got access to all of that information.
Of course, they don't really know, or at least They
haven't released all the info that the hacker did access,
but it's potentially that much. In April, researchers at the
(28:42):
University of Cambridge and the University of Namur, which is
in Belgium, I believe, combined, they combed through mountains of
data fromteen to compare the cost of trips taken in
New York City on uber X and compare that to
trips in traditional yellow cabs. They wanted to see do
you actually save money by taking uber X and guess
(29:04):
what you don't? Necessarily, They found that taxis were actually,
on average a dollar and forty cents cheaper than uber
X trips as long as the overall price was thirty
five dollars or less, meaning that it was a relatively
short cab trip. They found that on longer trips, where
the full price would be thirty five or more, or
(29:28):
rather more than thirty five dollars, the uber cars became
more competitive. Uh, it's just on the short trips cabs
were on the whole cheaper. Then again, you don't tip
uber drivers, but it is customary to tip cab drivers,
so it could be that once you factor in the tip,
the difference in prices is negligible. Uh. In fact, a
(29:48):
lot of the the scenarios I saw ended up having
the overall price of a cab trip being maybe fifty
cents more than an Uber trip, So it's it may
be that it doesn't really make a grand and difference
in the in in the big picture. Now, that discovery
actually led to the development of another app called Open
Street Cab, which lets you compare the estimated rates of
(30:10):
any particular trip between a cab and Uber X. And
the goal would be to build an app that automatically
recommends which service you use on any given trip. So,
in other words, you would open up this app, tell
you tell the app where you wanted to be picked up,
where you were going, and then it would estimate how
much you would spend on either service, keeping in mind
Uber's algorithmic searge pricing. Obviously, during a high surge price,
(30:36):
it would be much cheaper to take a cab because
cabs don't have surge prices. In June two thousand fifteen,
Parisian taxi drivers began to protest and they were violent
about it. I mean, there was some violent protesting in
the streets of Paris, and it was all about Uber
pop again that equipal, that European equivalent of Uber X.
(30:57):
Part of this reason what was that the taxi drivers
in Paris work in a highly regulated business and the
Uber drivers aren't subjected to the same restrictions that the
taxi drivers are, which creates what the taxi drivers see
as an unfair market. I've seen some common some folks
common on this saying that the problem is that taxis
(31:18):
are an outdated form of business. They are based upon
regulations that no longer really are applicable. And the real
issue here is that you're looking at an outmoded form
of business and comparing it to the new emerging business
as opposed to the new emerging business needs to adhere
(31:38):
to the rules of the old business. But whatever your
perspective is, there was clearly a disagreement here. And in
July two thousand fifteen, Steve Jerviston, who is a member
of the board for the company Tesla, said that kla
Nick had made a pretty bold statement and had said
that if Tesla could build a fully functional electric autonomous
(31:58):
car by twenty Uber would purchase half a million of them.
Now that would be every single vehicle Tesla would make
in that year. Because that's about how many cars Tesla
makes New Year's half a million. So essentially, call Nick
was saying, if you can make an electric autonomous vehicle
in I will buy every single one of them. Now,
(32:21):
that would be incredibly transformative. It would impact taxi drivers
and Uber drivers alike because according to one study, if
you had nine thousand electric autonomous vehicles, you could replace
all of the yellow cabs in New York City. That's
about thirteen thousand, five hundred medallions. Medallions are the essentially
(32:43):
the authorization to operate a vehicle as a cab. Now
that's in Manhattan really mostly Lower Manhattan. But those nine
thousand vehicles would replace thirteen thousand, five hundred vehicles, so
you would remove more than four thousand vehicles from the road,
from the streets of Manhattan. So traffic would decrease because
(33:04):
of that. Uh, the arguably you would have a much
safer environment because electric autonomous vehicles would be able to
respond much more quickly than human operated vehicles. There are
a lot of benefits to this. So let's say that
Uber bought five hundred thousand electric autonomous vehicles. Imagine how
(33:24):
many different regions they could impact. With that, if nine
thousand would be enough to affect Manhattan, keep in mind
the yellow cabs of Manhattan carry about four five thousand
fairs in an average day. Just imagine transforming all the
different markets out there with five hundred thousand of these cars.
(33:45):
You could make a huge impact across the entire United States,
assuming of course, that it was legal to operate autonomous
vehicles as taxis in those states. It would also mean
that Uber would be making a more money for the
company itself because it would be taking It would take
a hundred percent of the fairs as opposed to twenty.
(34:09):
Now here's some other points about cabs versus Uber in
New York City. Slayton had a piece about Uber and
New York and talked about how it didn't matter that
there are more Uber drivers in New York City than
there are cab drivers. That was one of those stories
that was capturing a lot of attention because you know,
people were using that as an argument to say, this
(34:32):
new disruptive business is threatening this older business that has
been established and regulated over the past several decades. Slate
pointed out that this there was a huge disparity in
the number of trips between yellow cabs and Uber. So
even though there are more Uber drivers in New York
(34:52):
City than there are cab drivers, the cab drivers are
taking way more of the fares again, thousand on average
per day. Uber is closer to thirty four thousand. They
also say, well, you know that there's this argument about
how you can make a really good salaries an Uber
driver in New York. All you have to do is
(35:14):
work forty or more hours a week. It turns out
that nearly all the drivers in New York who are
Uber drivers are driving significantly fewer hours than that of
New York's Uber drivers work between one and fifteen hours
per week, and another thirty five percent are driving between
sixteen and thirty four hours. So the vast majority are
(35:35):
driving fewer than forty hours per week. They're not making
that ninety thousand dollars that was quoted earlier. Um. In
other words, most of them are working as Uber drivers
as a part time job, not a full time gig.
And of course there's some other issues. Ubers come under
fire from multiple fronts. Uh they are the commissions and
unions that represent existing businesses that oppose Uber for various reasons,
(35:59):
from charges of fair competition to pointing out that Uber
needs to fall under the same rules as other services
that are in that space. There are also problems that
Uber has experienced with instances of drivers engaged in criminal
and violent behavior. I mean, obviously that is a huge issue,
and they're the criticisms about how Uber isn't responding to
calls to increase accessibility for people who suffer from disabilities.
(36:22):
So folks who have like you know, like people who
are bound to wheelchairs, they're having a harder time finding
Uber drivers that have vehicles equipped to handle that. So ideally,
in the future, Uber would have it built into the
app so that you could request this from the very
beginning and still have very fast response times. Obviously that's
(36:45):
going to take a lot of time, especially when you're
factor in Uber x, which require you know, has people
driving their own personal vehicles. Uh, there's an incentive for
them to have a vehicle that could accommodate someone who's
in a wheelchair, but that's not inexpensive and it's not
necessarily practical for all people who want to drive Uber X.
So that's a real problem. I mean that accessibility is
(37:07):
a very big issue that needs to be answered. I mean,
obviously you would not want to switch to Uber UH
and and have that be your only means of mass
transit for a given region if they weren't also accessible
for all people. There's also an ongoing public image problem
of how much the fair, how much of the fair
(37:28):
the company takes versus how much goes to drivers. UH.
It was a big deal when Uber moved from twenty
percent to twenty percent in San Francisco. They used San
Francisco as kind of a testing grounds for that, and
that was that was huge. Then in May, Uber announced
it would experiment with a tiered approach as a commission
for fairs. So in other words, it would be a
thirty percent take for the first twenty rides in a week,
(37:51):
the company would take thirty percent of the fairs and
the driver would take home the other seventy they're paid
weekly by the way. Then after the twenty rides it
would dip down to commission for the next twenty rides,
so from to forty the company would take of the fair.
Then after that it would drop to for all rides
(38:13):
until the end of the week. And keep in mind
that standard used to be for Uber x drivers across
the board, whether it was the first trip or the
forty one trip. Then there's the surge pricing. This is
one of those things that definitely has received a lot
of press, particularly in instances where people have been charged
huge amounts of money because the surge pricing was enormous,
(38:38):
like twenty times what the normal rate would be. So
search pricing kicks in during times of high demand. The
higher prices encourage are are supposed to encourage more Uber
drivers to hit the streets, so that way the supply
begins to catch up with the demand. As long as
the supply is meeting the demand, surge pricing isn't an issue.
(38:58):
It's when you have a lot of people asking for
rides in a particular part of town and there aren't
enough drivers. That's when search pricing kicks in. Uh. But
a Washington Post article written by Nicholas Dia Couplus postulates
that search pricing really all it does is to redistribute
the concentration of drivers in an area. It doesn't really
(39:18):
create an incentive for more drivers to go active. Uh. Now,
it does decrease demand because youwer people are willing to
pay a high price for cars. So if you if
you realize that there's a multiplayer put on there. And
by the way, the app does tell you there have
been many times where I've looked at the the searge
pricing the four point five times the regular price, and no,
(39:40):
it's not worth that to me. You can actually tell
in the app, Hey, alert me when search prices come
to an end, when it's back to its normal amount.
But that's that shows that search pricing can decrease demand,
so that can space out how many people need to
use or want to use the service in a given
area in a given time, and as that demand decreases,
(40:02):
the search pricing decreases as well. So you can actually
see this price fluctuate quite a bit within a pretty
crowded area. Search prices place a multiplayer on the base
cost of a trip, and that might so a trip
that might cost ten dollars on an average day could
end up being fifty dollars or more in a heavy
demand uh time frame. And there are a lot of
(40:24):
horror stories out there about people who didn't realize that
they were arranging a ride at peak demand, and we're
charged enormous amounts for that. Right again, if you pay attention,
you can pretty much tell what's gonna happen, but it
does require you to pay attention. Usually you can just
wait a few minutes and the pricing will adjust. But
that volatility does mean there's not a big incentive for
(40:45):
more drivers to hit the roads. This is why we
usually see it as a means of redistributing the the
concentration of drivers in an area, rather than increasing an
influx of new drivers. Like if you are an Uber
X driver and you see a message that surge pricing
is in effect, and you think I could make some money.
(41:06):
By the time you get to your car started up,
hit the road and go to pick up your first fair,
that surge pricing may be over because it's so volable,
it changes so quickly, so it can't really be an
incentive to get more people on the streets. Well, guys,
that kind of wraps up the Uber story so far.
I mean there's a lot more to cover, including this
(41:27):
idea of a fleet of robo cars taking you wherever
you want to go. But in order to cover that,
I asked Scott Benjamin to join me. So in our
next episode you'll hear Scott and I talk about this
idea and the pros and cons and what Scott thinks
about a world in which we may not have human
(41:47):
operated vehicles anymore. It's so much fun to break that
news to them. Anyway, you need to tune in for
the next episode to hear that. In the meantime, if
you have any suggestions for future topics that I can
tackle here on tex Stuff, you should write me. My
email address is tech Stuff at all stuffworks dot Com,
or dropped me a message on Twitter or Facebook the
(42:09):
handle words tech stuff hs W, and I'll talk to
you again really soon for more on this embattens and
other topics because it has stop works dot com
Get in text with technology with tex stuff, Chrome host
ft dot Com. EI there, and welcome to tex Stuff.
I'm Jonathan Strickland, and today we're going to look at
the Uber story, story about the company Uber, not an
Uber large embank story, although I guess it's that too.
(00:27):
Now this is gonna be part one. I've already recorded
Part two, Peek behind the Curtain brought Scott Benjamin in
for a little discussion about Uber and Uh. It ended
up being so long that it had to be its
own episode. I was originally just gonna kind of tag
it onto the end of this one, but you can
listen to the next episode to hear Scott's ideas about
Uber and autonomous cars and a fleet of vehicles that
(00:50):
take you places without any human drivers. But for this episode,
I really wanted to look at the story of Uber itself,
not its future, but it's past and up to the present.
So to look at how Uber came about, you have
to go back to two thousand eight. That's when a
pair of entrepreneurs named Garrett Camp and Travis Kalinnik began
(01:11):
to talk about a way to make it easier to
get a taxi in San Francisco, world's turn upon such
thoughts bloom So. Camp was a co founder of the
web discovery platform stumble Upon. So, in case you've never
used it, stumble Upon is a web discovery tool. Let's
users share web pages, you can rate them, and it
(01:34):
also a lots lets you discover other web pages and
photos and videos and other web related content that your
friends liked. It's sort of a curation engine, so the
idea is that it helps you discover stuff related to
your interests. So it's kind of like a search engine,
but it's always on the lookout for things that you
might find interesting, so kind of a baby step towards
(01:56):
the semantic web, but it's largely dependent upon other people
tagging that information. In May two thousand seven, eBay bought
stumble Upon for seventy five million dollars. So in two
thousand and eight, there's Camp sitting around thinking about what
he's going to tackle next. He's still CEEO of stumble Upon,
(02:17):
but you know, he's also flush with cash, and by
the way, he would go on to buy stumble Upon
back from eBay in two thousand nine along with a
few other investors. Meanwhile, you've got Travis Kalenik, who had
dropped out of the computer science program at u c
l A to found a company called Scour Incorporated. That's
s c O you are, and that was a multimedia
(02:42):
search engine. He also created scour Exchange, which was appeer
to peer file sharing service. Uh, peer to peer file sharing.
I'm sure you guys remember, But this is a method
of transferring large data files quickly by creating a network
of peers, all of whom are either hosting part of
(03:03):
or an entire file large file, and they make that
available to other peers in the network to download, so
it speeds up the downloading process. And this is not
necessarily a means to get illegal content like works that
are protected under copyright and in other words, it's not
necessarily a way to pirate stuff. But it has been
(03:24):
used to pirate things, and so a lot of people
equate peer to peer networks with illegal activity. That's just
not true. It's just a means of distribution. It's kind
of like saying a road would be illegal because someone
was driving something illegal in a car, or that the
car itself is illegal. That's ridiculous. Obviously. However, it has
(03:45):
meant that certain industry organizations like the m P A
A and the r I Double A have come down
on these companies and threatened them with enormous lawsuits for
allowing such things to happen. Uh. The d m c
A says that it gives you know, safe harbor to
(04:05):
two companies that host these services as long as those
companies take pains to remove or prevent piracy from happening uh,
and then they're they're protected. But the r I Double
A and the m P A and a couple of
other organizations all filed lawsuits against scour and so the
company declared bankruptcy in September in anticipation of those lawsuits
(04:29):
coming at them and kind of dissolved. Kalin Nick would
then go on to start other companies. The next one
was called red Swoosh, which was another peer to peer
file exchange service, which was eventually acquired by a Kami
Technologies or Akamai Technologies in two thousand seven for nineteen
million dollars. So both call Nick and Camp we're doing
(04:51):
pretty well for themselves. When they met up to talk
about a way to leverage the Internet and mobile devices
to make it easier to hail a cab to get
a taxi in San Francisco, and actually in the very
beginning it was a bit more elitist than that, according
to some reports. Anyway, The story is that Camp and
call Nick were in Paris for the low Web conference
(05:15):
and the two began to moll over what a pain
in the patook as it is to hail a cab
in San Francisco, particularly when you're loaded down with luggage.
So they started talking about collaborating on a particularly private venture.
They began to wonder if it would make sense for
them to go in together and purchase a Mercedes S
class vehicle and hire a personal driver and get a
(05:38):
parking spot in a garage that would be geographically equa
distant to their individual houses. In other words, at first,
they were just talking about sharing a personal driver and
a car, so kind of like an uber just for
the two of them. But this conversation evolved into the
idea for a mobile app that would allow you to
(05:58):
put in a request for a dry her and a
service of drivers capable of responding to such a call.
So Camp would go on to work on that idea
in his spare time, and he actually produced a prototype
app in March two thousand nine, at the time, he
was calling it uber Cab. Now Camp actually hired Kallinik
to become the full time custodian of uber Cab. So
(06:21):
Camp was still being busy as the CEO of stumble Upon,
and it was Kalenik's job to take this initial prototype
app and develop it until it could launch as a
real service, with the aim of launching it in San Francisco.
In January two tho the service was ready for a
test run and it was about as alpha as you
can get. There were only three cars and they started
(06:44):
in the city of New York City, so three cars
in New York City is a tiny test run of service.
In March two thousand ten, Uber would hire Ryan Graves
to become the general manager of the company. And this
is a pretty funny story all on its own. Kalinnik
actually posted on Twitter that he was looking for a
business developer and he said that there would be big
(07:07):
equity in a pre launch product. So Ryan Graves responded
to the tweet and send a Twitter message of his
own that said they should email him, and they and
he gave his email address over Twitter, and I guess
things worked out because they hired him. Now. Ryan Graves
had been working at General Electric and had described his
position there as being quote unquote unglamorous and not really
(07:32):
any room for him to to advance in his job,
at least not that he could see. He had also
served as an intern for four Square and apparently it
kind of just wheedled his way into their depending depending
upon whose account you believe, and he would eventually become
the CEO of Uber for a short while before Kalinnik
took over that position and Graves would become involved in
(07:55):
the global development of the company, so his focus began
to be um really directed at getting Uber into various
cities around the globe. But a very successful hire, and
it's funny that it happened over Twitter. In July two
thousand ten, Uber would hit the streets of San Francisco.
(08:15):
Uber Cab was being called an on demand car service
via the iPhone. There was no Android app at this point,
and at this stage the service already used the phone
to determine your location and to send a driver to you,
or you can use the map within the app service
itself to indicate an exact pickup location that your driver
would go to. Now, drivers in the area would be
(08:36):
alerted to your request, so when a driver accepts your request,
that request goes off the list, so that way you
don't get multiple drivers all responding to the same request.
The driver who accepted it then heads your way to
pick you up and take you to your destination, and
you can rate the driver, and the driver can also
rate you too. You can give a review and the
(08:58):
driver can review you, so users who have low ratings
might find that they aren't getting rides as easily as
other people. In other words, it pays to be nice
to your driver, or at least not to be obnoxious
and disruptive. In October, Uber Cab received a one point
to five million dollars in an investment round, and that's
(09:21):
also when the company would drop the cab from its
name and just become Uber. But the company also got
a cease and desist order from the Public Utilities Commission
of California, and the reason was because the organization accused
Uber of acting as a cab company without the proper
licensing to do so. In other words, Uber was performing
(09:43):
a service that was identical to that of taxi cabs,
but not having to obey the same rules that taxicabs
did so for the time being, Uber had to be
put out of commission in San Francisco uh In November
twenty Uber becomes available for Android device, and in February eleven,
the company would receive eleven million dollars from another round
(10:06):
of investments. A few months later, in May, Uber would
go live in New York City. In September eleven, Uber
landed itself in some hot water with journalists. It was
revealed that Uber has a sort of overview of the
entire system within a region, and some people were calling
it the God view. It shows the names and locations
of all the Uber users in that area. So remember
(10:29):
Uber is using the location data of your phone and
then broadcasts set to Uber so that drivers can find you.
But that also means that the system knows where you
are when you are using the Uber app, So if
you were able to access this view, you can see
where all the Uber users are in that area. It
(10:50):
was meant to be an internal tool, but they did
start showing it off in a party at Chicago, and
that really started off some trouble. Also, one Uber executive
apparently sent a message to a journalist who requested an
Uber ride so because the Uber executive executive could see
where the journalist was and how the journalist was active,
the executive sent a message saying, hey, won't you write
(11:11):
a story about Uber. Essentially, they were using the god
view to keep tabs on the journalist and that kind
of backfired. UH. That seemed to be a violation of privacy,
and since then Uber has said that it has placed
strict limits on who can view that particular data. So
this is not something that people can easily see now,
(11:32):
at least according to Uber. And Uber got another shot
of investments in December eleven. They raised thirty seven million
dollars and also launched service in Seattle, Boston, Chicago, Washington,
d C. And Paris. So they launched service in the
city where the idea for Uber was first born. In
(11:54):
April of twelve, Uber launched Uber x and that's what
allows people to become Uber drivers using their own personal
vehicles at a lower rate than what you'd find with
a taxi or with other Uber services whey're using black
cars or SUVs or other upscale vehicles. The company also
launched a feature in which you could use Uber to
(12:15):
hail an official taxicab in markets like Chicago. So in
some markets you can use Uber to get a regular
cab uh and uh instead of an Uber driver, and
in some markets that actually makes sense. I'll talk more
about that in a second. In November twelve, Uber caught
some flack for its surge pricing, which had been an
(12:36):
issue already. Surge pricing was really Uber's way and still
is Uber's way of managing the balance between supply and demand.
So if demand is really high, surge pricing kicks in
and the price for Uber services goes up as well,
at least until the supply ends up coming closer to
the demand. In other words, if the demand is really high,
(13:00):
surge pricing goes up. Other Uber drivers might end up
entering that area in order to take advantage of that
surge pricing, because Uber drivers make more if the prices
are higher. But as supply ends up meeting the same
as demand, then the prices come down. It's very much
reactive to that. Well. During emergency situations, the demand can
(13:23):
be very high and supply can be very low, and
that can end up creating a difficult and sometimes um
well certainly discriminatory pricing in the wake of pretty awful situations,
one of those being when Hurricane Sandy hit New York.
It was a very severe weather pattern that moved through
(13:46):
and hit New York much harder than anyone had anticipated,
and as a result, surge prices went way up in
New York after Sandy was moving through. Now Uber responded
by waiving the surge pricing for aids in the wake
of Sandy, and they also let drivers take home the
entire fair. Now Uber usually takes a commission off affairs.
(14:09):
Typically in the early days it was something like twenty percent,
meaning the driver would have eight percent of what they
made that day and the other twenty percent would go
to Uber. That has actually changed over time, and I'll
get to that in a little bit. Around that same time,
in two thousand twelve, late Uber was fined twenty thousand
dollars by the California Public Utilities Commission CPUC, in other words,
(14:31):
for operating an unlicensed taxi and limousine dispatch service. Those
fines would never be collected upon because Uber and the
Commission would strike a deal in early allowing Uber to
operate in California in return for following certain regulations. In
the summer of the rival service, Lift was starting to
(14:52):
get in some serious attraction. They were really starting to
take off. Lift had been around since twenty twelve, and
Uber had also had to face a battle on many
fronts as various cities and regions began to react to
its business model and you know, protest moving into those markets.
The company at that time was valued at three point
seven billion with a B dollars. In September, California would
(15:18):
become the first state to regulate what is called ride
sharing services. Here's where I take a moment to say,
I don't like the idea of calling these ride sharing services.
I think of ride sharing services as a means to
allow people to car pool. In other words, so if
I'm going to a concert maybe and I say, hey,
(15:39):
I'm going to this concert. I've got a card seats
about twenties, so come along and bring your jukebox money,
people can put in an app saying hey, I'm also
going to that concert. Can you pick me up? And
if it's on my way, I can do that. I
think of that as ride sharing. You are literally sharing
a ride, whereas with uber x you are using your
own personal vehicle. If you're an uber x dry, where
(16:00):
you're using your own car to drive people around. That's
not really ride sharing. It's still kind of more like
hailing a cab. It's just in this case it's not
a cab. It's someone's personal car. But it's not ride sharing.
I would argue, in fact, I think this whole share
based economy is a misnomer. But that's an episode for
(16:20):
another time. At any rate, California passes rules in two
thousand thirteen in September that require Uber drivers and other
drivers drivers of other services that are similar to Uber
to undergo a criminal background check, They have to pass
a training program, they have to obtain a permit from
the CPUC before driving for any of those companies, and
(16:42):
the companies themselves have to offer insurance coverage of the vehicles,
and that put Uber closer to the level of taxi service.
And in addition, the CPUC demands one third of one
percent of the total revenues as fees. UH the various
cars are his companies saw this as a victory, the
(17:03):
ability to have a legitimate claim to operating in those
environments now. The following month, Uber made a deal with
a few auto manufacturers like Toyota and GM, and also
with auto financing companies to make it easier for prospective
Uber drivers to get favorable financing rates on vehicles when
(17:25):
purchasing a car. So this was a strategic move on
Uber's part to attract more drivers to work with the
service because they were seeing escalating demand in various markets
and that meant that surge pricing was hitting all the
time because there weren't enough drivers to meet that demand,
and that meant that the people who were asking for
(17:45):
rides were getting these crazy surge prices tacked on, and
they didn't like that. They didn't want to take the
they didn't want to use the service because why use
a service that's so much more expensive than just taking
a cab. So there was a real incentive on Uber's
part to get more drivers into these markets in order
to meet the demand that was already there. So they
(18:07):
ended up making these partnerships, and Klinik said that a
fully utilized vehicle on Uber would grows more than a
hundred thousand dollars per year. Later estimations had at a
lower rate, but at this time he said about a
hundred thousand dollars per year if it was quote unquote
fully utilized. What that means I don't know, I imagine
(18:28):
at least forty hours a week. But using that information
and coming from Kalinnick himself, UH, the car financing companies
in the car manufacturers were able to leverage and or
able to look at better deals for prospective Uber drivers.
So if you wanted to drive for Uber and you
went forward trying to purchase a car this way, you
(18:50):
would actually get really favorable rates. And klin Nick estimated
that the preferential rates would actually result in a hundred
to two hundred dollars in savings on car ements per month.
So having less to pay was a big incentive if
you were already thinking about driving, and keeping in mind
that these Uber x drivers are using their own vehicles,
(19:11):
they have to purchase those vehicles and maintain those vehicles,
so this was a necessary incentive. In March two thousand fourteen,
Uber announced an insurance plan that would cover drivers when
there are no passengers in the car, and this would
be an extension of personal coverage that drivers were already
required to have in order to be an Uber x driver,
(19:33):
So this was to kind of add a little more
protection to those drivers. This this was in the wake
of some pretty tragic circumstances where an Uber driver struck
and killed a pedestrian. Very tragic story, but Uber had
maintained that the the incident when it happened, the Uber
driver was not carrying a fair nor was the Uber
(19:55):
driver responding to a fair request at that exact moment.
In May two thousand fourteen, Travis Kalinnik spoke at the
CODE Conference and revealed Uber's long term plan is to
switch to autonomous vehicles, which we mean they would replace
human drivers, the cars would drive themselves. He talked about
(20:15):
the future in which car ownership would be increasingly rare,
particularly for dense urban environments, and in those places, instead
of owning a car, you just call for a car
whenever you needed one, and it would arrive within thirty
seconds and then take you to where you're you needed
to be efficiently and safely, and you wouldn't need a
space for your own car, because why would you ever
(20:36):
own one. You you could have that space set aside
for something else, And cars usually sit idle like nine
percent of the time. You aren't in your car that
frequently in the grand scheme of things, So why would
you pay for something that you only use ten percent?
Of the time you own it and you have to
pay for the place to keep it, especially if you're
(20:58):
in a living in a place like New York City,
where the payment for a car parking spot might be
the same as an apartment in other parts of the world.
So it's a pretty powerful argument. Uh. It also suggests
that Uber is not terribly concerned with what their drivers
think of the the company in the long term, but
(21:18):
the public image of Uber has been something of a
problem area for its entire existence. Anyway, This only makes sense, obviously,
if the amount you would spend on car rides through
the service would be less than what you would spend
on the ownership and maintenance of a vehicle. So I
(21:39):
guess in the very long run, if you were to
keep a car for a very very long time, then
you could argue that the personal car ownership makes more
sense because you are getting the most out of that vehicle,
and that's less common today than it was twenty years ago.
So I don't know that you can make that argument
as effectively today at any rate. Klan Nick says the
(22:00):
real reality of such a day is quite a long
ways off, but it is inevitable we will get there.
And this address that he gave at the CODE conference
came not long after Uber had released a report that
claimed Uber drivers would make much more money than cab
drivers would now. According to that report, a cab driver's
salary was around the thirty thousand dollar per year mark,
(22:22):
and Uber said the median wage for a New York
based Uber x driver who works at least forty hours
per week is ninety thousand, seven d sixty six dollars
per year. In San Francisco it was seventy four thousand
dollars per years. So obviously the amount you make was
relied heavily upon where you actually work, and that doesn't
(22:45):
factor into account the expenses the driver would incur in
owning and operating and maintaining that vehicle. So those those
figures don't indicate like how much did the car cost,
how much did it cost to fuel the vehicle or
park the vehic goal when you weren't using it, or
just take it in for tuneups. None of that is
factored into that that revenue, so keep that in mind too.
(23:08):
In June two thousand fourteen, Uber announced another round of funding.
In that time, it was truly huge, as in one
point to billion dollars, and at that point the company
was valued at seventeen billion dollars, so definitely on a
stress spurc rise and we're not done yet. In August
two thousand fourteen, that's when we had the the publication
(23:33):
of all the stories of the great Uber versus Left war.
So during August we started seeing lots of reports of
one side accusing the other shenanigans. Most of the accusations
were from Left against Uber and had the added up
of internal memos to support the allegations. Left executives accused
(23:56):
Uber of running a campaign designed to sabotage lifts operations.
So the accusation said that Uber drivers had been using
Lift to call for rides and then to cancel them,
which would tie up drivers and make them frustrated as
they failed to get fares. At the same time, Uber
was accused of beginning a campaign to lure lift drivers
(24:18):
away from Lift to work for Uber instead. Now Uber
claims that lift drivers were also calling and canceling rides,
and in greater numbers than the other way around, And
the fight got really super ugly. And it's not exactly
done yet, but boy, that was some nasty press that
came out at during that time. Also in August, Uber
(24:42):
hired David Pluff and I'm probably butchering his last name,
but as a lobbyist to help push for favorable changes
in regulations and laws that could give Uber a place
in the market. He had formerly been a campaign manager
for President Obama, so it was very well versed in
the world of politics. In November two thousand fourteen, Emil Michaels,
(25:04):
who was a senior vice president still is at Uber,
suggested digging up dirt on journalists who published stories that
are critical of Uber. In other words, he seemed to
suggest using blackmail to silence critics, and kalin Nick would
eventually apologize for Michael's remarks, but he wasn't fired or
demoted as a result of them, which made a lot
(25:25):
of people really angry. By the end of two thousand fourteen,
Uber was valued at forty billion dollars, so twice as
much from the previous year. Uber is also banned in
Spain and Thailand, the reason given that the service is
unfair to other businesses, the taxi business in other words,
(25:46):
and Holland would ban Uber Pop, which is the UH
the European version of Uber X, but Holland would continue
to allow other versions of Uber to operate within the country. Portland,
Oregon sued to shut down Uber when it launched there,
because of course it did. In December fourteen, and Uber
(26:07):
driver was charged with kidnapping and raping and Uber customer,
which absolutely horrifying story. And this isn't the only instance
of an Uber employee being accused of something so heinous
as as rape. It's unfortunately happened a few times. At
least the charges have been levied a few times. UM.
(26:27):
A Florida driver was charged with assaulting a female passenger.
There were a couple of instances in Chicago, one in
which an uber x driver was accused of sexually assaulting
a female passenger, and a different Uber x driver in
Chicago was charged with sexual assault UM in January for
attacking a male passenger. Also in January, a criminal trial
(26:51):
began for an Uber driver in India who was accused
of rape, and in February, a Boston driver was charged
with indecent assault and battery. So partially as a response
to the driver assaults on passengers, Uber institute a measure
that was found originally in the Indian version of its
app uh this was a panic button that they they
(27:14):
enacted in Chicago. That panic button alerts police if the
writer feels threatened while inside the vehicle. They also announced
that they were going to institute much more um strict
criminal background checks before hiring on any drivers. So this
has been an incredibly negative story, obviously for obvious reasons.
(27:37):
You never want to have a company that's a service
oriented company putting customers at risk, clearly, and Uber has
been you know, responsive to it. But there have been
a lot of critics who said that the company has
not done enough, nor has it done it quickly enough,
nor has it been responsible because this should never have
(27:58):
happened in the first place. So again Uber's public image
is taking a beating. Wouldn't be the last time. In February,
Uber revealed that a hacker had gained access to its
database in sometime, but it was waiting until reveal this
information really as part of the investigation that the company
(28:20):
needed to be quiet. The database contained the names and
driver's licensed numbers of around fifty thousand Uber drivers, so
potentially the hacker got access to all of that information.
Of course, they don't really know, or at least They
haven't released all the info that the hacker did access,
but it's potentially that much. In April, researchers at the
(28:42):
University of Cambridge and the University of Namur, which is
in Belgium, I believe, combined, they combed through mountains of
data fromteen to compare the cost of trips taken in
New York City on uber X and compare that to
trips in traditional yellow cabs. They wanted to see do
you actually save money by taking uber X and guess
(29:04):
what you don't? Necessarily, They found that taxis were actually,
on average a dollar and forty cents cheaper than uber
X trips as long as the overall price was thirty
five dollars or less, meaning that it was a relatively
short cab trip. They found that on longer trips, where
the full price would be thirty five or more, or
(29:28):
rather more than thirty five dollars, the uber cars became
more competitive. Uh, it's just on the short trips cabs
were on the whole cheaper. Then again, you don't tip
uber drivers, but it is customary to tip cab drivers,
so it could be that once you factor in the tip,
the difference in prices is negligible. Uh. In fact, a
(29:48):
lot of the the scenarios I saw ended up having
the overall price of a cab trip being maybe fifty
cents more than an Uber trip, So it's it may
be that it doesn't really make a grand and difference
in the in in the big picture. Now, that discovery
actually led to the development of another app called Open
Street Cab, which lets you compare the estimated rates of
(30:10):
any particular trip between a cab and Uber X. And
the goal would be to build an app that automatically
recommends which service you use on any given trip. So,
in other words, you would open up this app, tell
you tell the app where you wanted to be picked up,
where you were going, and then it would estimate how
much you would spend on either service, keeping in mind
Uber's algorithmic searge pricing. Obviously, during a high surge price,
(30:36):
it would be much cheaper to take a cab because
cabs don't have surge prices. In June two thousand fifteen,
Parisian taxi drivers began to protest and they were violent
about it. I mean, there was some violent protesting in
the streets of Paris, and it was all about Uber
pop again that equipal, that European equivalent of Uber X.
(30:57):
Part of this reason what was that the taxi drivers
in Paris work in a highly regulated business and the
Uber drivers aren't subjected to the same restrictions that the
taxi drivers are, which creates what the taxi drivers see
as an unfair market. I've seen some common some folks
common on this saying that the problem is that taxis
(31:18):
are an outdated form of business. They are based upon
regulations that no longer really are applicable. And the real
issue here is that you're looking at an outmoded form
of business and comparing it to the new emerging business
as opposed to the new emerging business needs to adhere
(31:38):
to the rules of the old business. But whatever your
perspective is, there was clearly a disagreement here. And in
July two thousand fifteen, Steve Jerviston, who is a member
of the board for the company Tesla, said that kla
Nick had made a pretty bold statement and had said
that if Tesla could build a fully functional electric autonomous
(31:58):
car by twenty Uber would purchase half a million of them.
Now that would be every single vehicle Tesla would make
in that year. Because that's about how many cars Tesla
makes New Year's half a million. So essentially, call Nick
was saying, if you can make an electric autonomous vehicle
in I will buy every single one of them. Now,
(32:21):
that would be incredibly transformative. It would impact taxi drivers
and Uber drivers alike because according to one study, if
you had nine thousand electric autonomous vehicles, you could replace
all of the yellow cabs in New York City. That's
about thirteen thousand, five hundred medallions. Medallions are the essentially
(32:43):
the authorization to operate a vehicle as a cab. Now
that's in Manhattan really mostly Lower Manhattan. But those nine
thousand vehicles would replace thirteen thousand, five hundred vehicles, so
you would remove more than four thousand vehicles from the road,
from the streets of Manhattan. So traffic would decrease because
(33:04):
of that. Uh, the arguably you would have a much
safer environment because electric autonomous vehicles would be able to
respond much more quickly than human operated vehicles. There are
a lot of benefits to this. So let's say that
Uber bought five hundred thousand electric autonomous vehicles. Imagine how
(33:24):
many different regions they could impact. With that, if nine
thousand would be enough to affect Manhattan, keep in mind
the yellow cabs of Manhattan carry about four five thousand
fairs in an average day. Just imagine transforming all the
different markets out there with five hundred thousand of these cars.
(33:45):
You could make a huge impact across the entire United States,
assuming of course, that it was legal to operate autonomous
vehicles as taxis in those states. It would also mean
that Uber would be making a more money for the
company itself because it would be taking It would take
a hundred percent of the fairs as opposed to twenty.
(34:09):
Now here's some other points about cabs versus Uber in
New York City. Slayton had a piece about Uber and
New York and talked about how it didn't matter that
there are more Uber drivers in New York City than
there are cab drivers. That was one of those stories
that was capturing a lot of attention because you know,
people were using that as an argument to say, this
(34:32):
new disruptive business is threatening this older business that has
been established and regulated over the past several decades. Slate
pointed out that this there was a huge disparity in
the number of trips between yellow cabs and Uber. So
even though there are more Uber drivers in New York
(34:52):
City than there are cab drivers, the cab drivers are
taking way more of the fares again, thousand on average
per day. Uber is closer to thirty four thousand. They
also say, well, you know that there's this argument about
how you can make a really good salaries an Uber
driver in New York. All you have to do is
(35:14):
work forty or more hours a week. It turns out
that nearly all the drivers in New York who are
Uber drivers are driving significantly fewer hours than that of
New York's Uber drivers work between one and fifteen hours
per week, and another thirty five percent are driving between
sixteen and thirty four hours. So the vast majority are
(35:35):
driving fewer than forty hours per week. They're not making
that ninety thousand dollars that was quoted earlier. Um. In
other words, most of them are working as Uber drivers
as a part time job, not a full time gig.
And of course there's some other issues. Ubers come under
fire from multiple fronts. Uh they are the commissions and
unions that represent existing businesses that oppose Uber for various reasons,
(35:59):
from charges of fair competition to pointing out that Uber
needs to fall under the same rules as other services
that are in that space. There are also problems that
Uber has experienced with instances of drivers engaged in criminal
and violent behavior. I mean, obviously that is a huge issue,
and they're the criticisms about how Uber isn't responding to
calls to increase accessibility for people who suffer from disabilities.
(36:22):
So folks who have like you know, like people who
are bound to wheelchairs, they're having a harder time finding
Uber drivers that have vehicles equipped to handle that. So ideally,
in the future, Uber would have it built into the
app so that you could request this from the very
beginning and still have very fast response times. Obviously that's
(36:45):
going to take a lot of time, especially when you're
factor in Uber x, which require you know, has people
driving their own personal vehicles. Uh, there's an incentive for
them to have a vehicle that could accommodate someone who's
in a wheelchair, but that's not inexpensive and it's not
necessarily practical for all people who want to drive Uber X.
So that's a real problem. I mean that accessibility is
(37:07):
a very big issue that needs to be answered. I mean,
obviously you would not want to switch to Uber UH
and and have that be your only means of mass
transit for a given region if they weren't also accessible
for all people. There's also an ongoing public image problem
of how much the fair, how much of the fair
(37:28):
the company takes versus how much goes to drivers. UH.
It was a big deal when Uber moved from twenty
percent to twenty percent in San Francisco. They used San
Francisco as kind of a testing grounds for that, and
that was that was huge. Then in May, Uber announced
it would experiment with a tiered approach as a commission
for fairs. So in other words, it would be a
thirty percent take for the first twenty rides in a week,
(37:51):
the company would take thirty percent of the fairs and
the driver would take home the other seventy they're paid
weekly by the way. Then after the twenty rides it
would dip down to commission for the next twenty rides,
so from to forty the company would take of the fair.
Then after that it would drop to for all rides
(38:13):
until the end of the week. And keep in mind
that standard used to be for Uber x drivers across
the board, whether it was the first trip or the
forty one trip. Then there's the surge pricing. This is
one of those things that definitely has received a lot
of press, particularly in instances where people have been charged
huge amounts of money because the surge pricing was enormous,
(38:38):
like twenty times what the normal rate would be. So
search pricing kicks in during times of high demand. The
higher prices encourage are are supposed to encourage more Uber
drivers to hit the streets, so that way the supply
begins to catch up with the demand. As long as
the supply is meeting the demand, surge pricing isn't an issue.
(38:58):
It's when you have a lot of people asking for
rides in a particular part of town and there aren't
enough drivers. That's when search pricing kicks in. Uh. But
a Washington Post article written by Nicholas Dia Couplus postulates
that search pricing really all it does is to redistribute
the concentration of drivers in an area. It doesn't really
(39:18):
create an incentive for more drivers to go active. Uh. Now,
it does decrease demand because youwer people are willing to
pay a high price for cars. So if you if
you realize that there's a multiplayer put on there. And
by the way, the app does tell you there have
been many times where I've looked at the the searge
pricing the four point five times the regular price, and no,
(39:40):
it's not worth that to me. You can actually tell
in the app, Hey, alert me when search prices come
to an end, when it's back to its normal amount.
But that's that shows that search pricing can decrease demand,
so that can space out how many people need to
use or want to use the service in a given
area in a given time, and as that demand decreases,
(40:02):
the search pricing decreases as well. So you can actually
see this price fluctuate quite a bit within a pretty
crowded area. Search prices place a multiplayer on the base
cost of a trip, and that might so a trip
that might cost ten dollars on an average day could
end up being fifty dollars or more in a heavy
demand uh time frame. And there are a lot of
(40:24):
horror stories out there about people who didn't realize that
they were arranging a ride at peak demand, and we're
charged enormous amounts for that. Right again, if you pay attention,
you can pretty much tell what's gonna happen, but it
does require you to pay attention. Usually you can just
wait a few minutes and the pricing will adjust. But
that volatility does mean there's not a big incentive for
(40:45):
more drivers to hit the roads. This is why we
usually see it as a means of redistributing the the
concentration of drivers in an area, rather than increasing an
influx of new drivers. Like if you are an Uber
X driver and you see a message that surge pricing
is in effect, and you think I could make some money.
(41:06):
By the time you get to your car started up,
hit the road and go to pick up your first fair,
that surge pricing may be over because it's so volable,
it changes so quickly, so it can't really be an
incentive to get more people on the streets. Well, guys,
that kind of wraps up the Uber story so far.
I mean there's a lot more to cover, including this
(41:27):
idea of a fleet of robo cars taking you wherever
you want to go. But in order to cover that,
I asked Scott Benjamin to join me. So in our
next episode you'll hear Scott and I talk about this
idea and the pros and cons and what Scott thinks
about a world in which we may not have human
(41:47):
operated vehicles anymore. It's so much fun to break that
news to them. Anyway, you need to tune in for
the next episode to hear that. In the meantime, if
you have any suggestions for future topics that I can
tackle here on tex Stuff, you should write me. My
email address is tech Stuff at all stuffworks dot Com,
or dropped me a message on Twitter or Facebook the
(42:09):
handle words tech stuff hs W, and I'll talk to
you again really soon for more on this embattens and
other topics because it has stop works dot com
TechStuff News
Hosts And Creators
Oz Woloshyn
Karah Preiss
Popular Podcasts
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.
24/7 News: The Latest
The latest news in 4 minutes updated every hour, every day.
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.