Thursday, April 21, 2016

Uber: The Good and the Bad

I am fortunate that with my occupation I get to visit many cities and interesting places across the US, Europe and Mexico. I've become a regular user of Uber and spend way too many hours in lineups whether at an airport, taxi stand, or hotel. As such, it is of paramount importance for me to be efficient in my modes of transit.

I can consider myself as an early adopter of Uber from the beginning, and am often annoyed when I land in s city where Uber is not available. Each time I enter an Uber I make a point of speaking to the driver to get their feedback on the service, their level of satisfaction, and how they perceive their role in the transportation industry.

In large, Uber has been perceived by drivers and the general population, or at least my peers and immediate circle, as a positive experience and service. For many drivers it has helped them achieve a work-life balance, or to fill the gap while they are pursing other dreams (think entrepreneurs, actors, musicians), or as a new career.  

While Uber and competitors have been growing in popularity, in many places it has not been accepted with open arms, including legal battles, and even violence. The most interesting aspect of the Uber revolution is how it is helping redefine business models and challenging an industry that has not innovated in decades. It is a model that while may be disruptive in the short and mid-term, will experience major iterations of fine-tuning over the next five or ten years, and evolve into something sustainable and common-place.

Though I do not believe that Uber will work everywhere, or should it. Let me provide a few examples.

The promise, and premise of Uber, in the early days at least, was to optimize use of all the black limos that sit idle for hours per day, and provide customers with a frictionless way of getting around. The most painful part of taking a taxi was hailing a cab, waiting in the rain hoping one would drive by, then fumbling with cash and coins and trying to figure out an appropriate tip. All in the meantime, hoping not to get ripped off and taken on a scenic ride. It is important to note here that the notion of cost wasn't even part of the equation. It is about the transaction and delivery of service.

The free marketplace is intended to permit supply and demand, for the adoption of new products and services as the opposing forces to regulate success and failure.

The first classic use case for justifying the existence of Uber is in cities like New York, Toronto and Lisbon. In these cities, from my experience at least, is the classic example where it can be difficult to hail a cab, where many cars are extremely dirty and smell, where drivers will ask you where you are going then say no, where many drivers are rude, and there is little confidence that they won't take you for a longer than necessary ride. I will be clear that this is not every driver and not every experience, but it is true in enough incidences that it spoils it for all the good, honest, hard working drivers out there. The working conditions for many of these drivers simply would not be tolerated elsewhere. In some of these locales, the cars and 'badges' are owned by monopolies, and is a very hard industry to make a living.

In these cases, the disruption by ride-sharing services is completely justified. There is a product/service that is superior to the existing, it is a better deal for the driver/employer/contractor, and has value for the customer. This should be a happy win-win situation for everyone. In this case, the system has worked.

Use case number two. Traveling to unfamiliar places, some of which may be notorious for having unreliable or unsafe taxi services, and many locals stressing to use Uber instead of local taxis. These technology driven services in these cases adds a level of accountability. One can travel with minimal cash, the transaction is paperless, and completely tracked using the technology infrastructure. For the weary traveler, this peace of mind and convenience is well received. 

Though, as I started out, this system isn't meant to work everywhere. A prime example is London, England. The iconic black cab in London is nothing like that in say a New York or Toronto. While the system is highly regulated, the premise is that anyone who drives a cab and can pick up someone on the street to drive them somewhere, is essentially an ambassador to the city. They carry a lot of responsibility and as such, should be held to very high standards. As a result, as a driver in London, you must take a 3 year study called the "knowledge' which is a grueling study on every inch of London. Need directions, need advice, need a good recommendation of a place to eat, find something out of the way, or the best local spot, there is not a more helpful and knowledgeable resource than the nearest black cab. The black cabs may be pricey, but there is value to what they do and plays a very important role in the operation and culture of the city.

Is there value to protect this service, to protect the culture of getting around London. I believe there is. The challenge is in the balance as Uber has threatened this way of life.

These are just a few examples of they benefits and complexity of a changing business model. Though while many of the proponents of the disruptive business model point to the free market capitalist forces as part of the justification, there is a social and moral obligation as well. As much as we all like to think we operate within a free market model, there is a very strong social reality and responsibility. We do not operate in a void of letting the markets take care of everything. We are a charitable society, one that values prosperity, health and general wellness. 

My point here is that there are very few occupations where someone with few qualifications, new to the country, or less educated, or in a current bind where they need to make ends meet, can take employment and make it through the week. Some will say Uber does this if fact, and better than the taxi industry, though it does not eliminate the fact that the current taxi industry plays an important role for many today.

The bright side is that the ride-sharing, or on-demand economy is still in it's early days and will continue to evolve and iterate. In a few years from now, it'll be very different.

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