Bacon's Rebellion

Democracy Thrives in Sunlight

Wild Ride

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by

James A. Bacon
in ,

uber_poolby James A. Bacon

Last week Governor Terry McAuliffe gave the Uber and Lyft ride-sharing services provisional permission to operate in Virginia as long as they comply with minimal standards for hiring drivers. Uber entered the Richmond marketplace around the same time, putting six cars on the road. Rates are competitive with those of local taxicabs but Uber offers the advantage of more timely pick-ups.

While taxicab companies are a political nuisance, using the regulatory apparatus in state after to state to block Uber from the market, the company’s toughest competitor is Lyft, according to a Wall Street Journal piece describing the relationship between the two San Francisco companies as “Tech’s Fiercest Rivalry.” Competition in the business of shared ridership, which includes other start-ups such as Sidecar, is intense. Companies are testing new innovations every day. Some ideas catch on, others fall by the wayside, but the business is evolving rapidly.

The latest permutation, rolled out by the two companies independently on the very same day, is carpooling. Lyft Line and Uber Pool let passengers ride with strangers and split the bill. While the innovation might reduce revenues temporarily, both companies are betting that they can more than offset the loss by growing the size of the shared-rider market.

This is entirely consistent with what I have long predicted: Shared ridership companies will continue to push their innovations “down market” — to less affluent customers — in order to build a larger customer base. Uber started as a company that provided luxury car rides at premium prices. Then it introduced UberX, which provides taxicab-comparable rides. Now it is moving into carpooling. A future next step — and if Uber doesn’t do it, someone else will — will be to introduce a jitney-like van service that provides rides along high-traffic transportation corridors at rates and schedules that are more than competitive with buses.

Hat’s off to the McAuliffe administration for fostering transportation innovation in Virginia rather than stifling it. Stick to your guns. If you think the taxicab companies can raise political hell, just wait until municipal transit companies start complaining that Uber or Uber-like companies are “skimming the cream” of their customer base. This ride ain’t over by a long shot.

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One response to “Wild Ride”

  1. larryg Avatar
    larryg

    Well, if you look at the “requirements” they pretty much are what cabs have to do – the driver has to have a a criminal background check, have clean driving record, have an inspected vehicle and have commercial insurance.

    And Uber and Lyft have come off their claim that they are not responsible just a software app… they have now agreed that they are a for-profit transportation provider.

    so.. what is to keep cabs from also having smartphone apps?

    but here is another question related to ride sharing – what is to keep ordinary people from soliciting “shared” rides with “shared expenses” via a smartphone app?

    what’s to keep, for instance – a gal headed to the airport from picking up someone and sharing the cost of the car parking, or catching a ride home from the airport with someone willing to share their car?

    my prediction is that the biggest competition is going to come – not from peer competitors – but from folks they are counting as potential customers, ordinary people that they too can “share” rides .. even cheaper than with Uber/Lift/wannabies?

    want to carpool to work ? why not a smartphone carpool app house-to-house or at a commuter lot?

    Further – and I mentioned this in the transit post.

    you have folks who have vans outfitted for wheelchairs. Why not a Smartphone app – for door-to-door service – paid for with a benefits debit card?

    why not people with pickups and trailers offering to haul stuff ..for a fee?

    I do wonder – if – like a lot of companies that begin life over a new innovation – if they actually see far enough into the future to know where they should be navigating towards – as a business model?

    I will agree – that this will end the cabbing industry as we currently know it but like a lot of things – it will evolve in ways we don’t yet anticipate and likely will bring disadvantages as well as advantages.

    what it’s more likely to do, in my view, is destroy the marginal ridership of transit lines which will then force everyone that relied on transit into the world of uber/lyft and variants including individual ad-hoc carpools and van pools.

    I think if Uber/Lyft were smart – they’d propose transit services.. and go after the transit grant dollars with a fleet of minivans but also it is intriguing if someone deploys a non-profit service where only expenses are charged or they receive subsidies or grants to provide that service.

    buckle your seat belts!

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