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