The Uber Endgame: Why Uber (and Lyft) continue to look more and more like mass transit

We’ve posted a couple stories about UberPool lately and this week’s big news was that Uber is testing out ‘bus-like’ routes in San Francisco.  Remember, Uber’s goal is to make themselves cheaper than owning a car for the average consumer but there’s one thing that’s holding them back: drivers.  

Since there’s a minimum dollar amount (that Uber is constantly testing) at which drivers are willing to drive, the only way to continue driving the price down for passengers is through more efficient pick-ups (see smart routes and suggested pick-up points) and removing all of the wasted space/time of each ride.

The Uber Endgame: Why Uber (and Lyft) continue to look more and more like mass transit
The Uber Endgame: Why Uber (and Lyft) continue to look more and more like mass transit

In an ideal world, drivers would never have an empty seat as long as they’re driving and all of these Uber-innovations are actually headed in that direction.  In just the past few weeks, we’ve seen Uber add multiple potential pick-ups to UberPool rides, smart routes, suggested pick-ups, and I suspect they’ve got lots more of these features in the works.

My hope would be that Uber would pass some of the savings on the consumer’s side to drivers but as we’ve already seen with UberPool, that’s probably not going to happen.  I think Uber is running down a slippery slope since some of these efficiencies (like UberPool) are asking a lot more out of drivers yet the compensation doesn’t reflect that.  It’s going to be difficult for Uber to achieve its goals without most of its drivers buying in, but it may be a while before they realize this.

Today, RSG contributor, John Ince, takes a look at why Uber and Lyft continue to look more and more like mass transit, and more.  Please let us know in the comments below what you think of Uber’s new smart routes and what the longer-lasting impact could mean for drivers.

The Uber Endgame: Why Uber (and Lyft) continue to look more and more like mass transit

Sum and Substance: In San Francisco, Uber recently began testing what it calls “Smart Routes,” TechCrunch reports:

Rather than hailing an Uber directly to your door, UberPool’s map shows a green line overlaid on a major artery street nearby. If you’re willing to set your pickup location anywhere along these Smart Routes, Uber will compensate you with a discount of $1 or more off the normal UberPool price. In some cases that means walking a few blocks to your pickup spot. A little less convenient, a little cheaper.

Several weeks earlier, Uber began testing what it calls “Suggested Pickup Points”:

When dragging the pickup pin, the feature explains that passengers can “save time at these locations”, and shows places nearby where it would quicker for the driver to pick them up. Users can drop their pin on these green dots, see the address, and then walk there to shorten their wait time. … For example, at the San Francisco Giants’ AT&T ballpark above, Uber suggests people head to one of the corners outside, rather than in the middle of the block where traffic rushes and there’s nowhere to pull over. If you’re in an one-way alleyway, Uber recommends you head out to the next main street.

Josh Constine compares Smart Routes to another “ride sharing service, Loup, which pays people to drive their cars and pick people up on bus-like routes through a city, and Chariot which does the same but with big vans.” But if you put all of these Uber innovations together—pre-determined routes with fixed pickup points and continuous passenger pickups—it sounds remarkably like a gently optimized version of currently existing mass transit,

My Take: Smart moves on Uber’s part – all part of the ongoing evolution of ridesharing. Drivers benefit because the pickup are easier.  Passengers benefit with cheaper fares. All it will take to succeed is a passenger who’s willing to walk a short distance.  Considering most Uber passengers are young, this is a no brainer.  Will Uber replace mass transit?  Never.  Will driver’s eventually get upset that prices are dropping even lower?  Probably, but Uber is in Harry’s words, “passenger centric.”  What else is new?  Passengers pay and money talks, even if they have to walk a few blocks for the privilege.

Uber announces new research project for self-driving cars

Sum and Substance: Uber just moved another step closer to realizing its goal of driverless cars. The ride hailing company announced a new research partnership with the University of Arizona focused on mapping and optics, both of which are essential to self-driving vehicles. The partnership will allow Uber employees to work with researchers at the university specializing in lens design “to improve the imagery of what we capture and use to build out mapping and our safety features,” Uber’s Brian McClendon told the Associated Press. The company will also test its mapping vehicles in Tuscon and is donating $25,000 to the university’s College of Optical Sciences as part of the project. News of the partnership coincided with an executive order from Arizona Governor Doug Ducey “supporting the testing and operation of self-driving vehicles in Arizona,” according to the governor’s office.

My Take:  This story is trending and with good reason. It captures some of the more fanciful elements that has investors so infatuated with Uber.  Driverless cars are still a long ways off, but to get there, a lot of smaller breakthroughs must come first and this is a good way to start, especially if the Governor is behind you.

Detest Uber’s surge pricing? Some drivers don’t like it either

Sum and Substance: While Uber has built a multibillion-dollar business by connecting passengers with drivers via a smartphone app, few topics court more controversy than surge pricing, which typically happens during rush hour, bad weather, big events or on certain holidays. The company says this practice is critical to getting more drivers on the road when demand is at its greatest. But most Uber riders despise surge pricing. They’ve complained about running up bills totaling hundreds of dollars and have criticized the company for using surge pricing during emergencies, like Hurricane Sandy and the Sydney hostage crisis. The San Francisco Better Business Bureau gave Uber the grade of an F because of complaints related to surge pricing. And New York lawmakers have even proposed legislation to put limits on how high fares can go. Now some drivers, like Ashlock, are also having second thoughts on surge pricing.

My Take:  Surge pricing remains one of the most innovative and controversial aspects of Uber’s business model.  Does surge really reflect the interplay of supply and demand or is is just their way of gouging price insensitive passengers at their moment of greatest need?  This article covers all the main points.

Driver’s often feel queasy when their passenger gets charged a fare that seems out of line … often taking a hit with a low rating.   Most experienced drivers know not to chase surge, because by the time you get there, the surge is gone.  I’ve kind of been amazed how often there’s a surge in Marin, where I often driver, when there’s obviously more demand in San Francisco and no surge there.  That could be due to fewer drivers in Marin, but it’s also possible that Marin tends to be affluent.  I’ve also discovered that surge generally means fewer ride requests.  I suspect passengers are getting wise to Uber’s maneuvers, but that won’t stop Uber from trying them.  It becomes a game of cat and mouse.  When the mouse (the pax) gets caught (with a surge) it’s often not a pretty sight.

Another Uber driver sues, claiming unpaid wages

Sum and Substance: A California man who drives for Uber has sued the company in federal court, claiming he’s owed unpaid wages under the federal Fair Labor Standards Act. Greg Fisher, a Los Angeles resident, says Uber should pay him unpaid minimum wage, unpaid overtime, and other damages under the law. He’s driven for Uber for periods longer than eight hours, according to the lawsuit that was filed Tuesday in U.S. District Court for the Northern District of California. For overtime, the Fair Labor Standards Act kicks in after 40 hours of work per week. Fisher is asking the judge to grant class action status, which would allow others to join him as plaintiffs in the lawsuit. The suit puts more pressure on Uber as it fights similar legal battles over the status of its drivers and how they’re treated.

My Take:  Add one more to the growing list of litigants against Uber.  If Fisher gets Class Action status, this one could also have wide ramifications.  It might not be as damaging as the existing lawsuits vs Uber and Lyft in San Francisco, because not that many drivers are on the app more than 40 hours per week.  But for those who are, this could be a huge windfall if Uber loses in court.  Uber became an item because investors saw how quickly they could implement their business model by disregarding existing laws.  It takes awhile for those laws to catch up to current practices, but Uber will eventually have to face up to the same rules that other companies do.  At that point … who knows what will happen.  This story is still unfolding.

The Weeknd – Can’t Feel My Face (Uber Edition)

Sum and Substance:  From the Driver …For those concerned. Please know that my hands were always on the wheel & they were only off the wheel when we were at a red light or stopped. In addition, I made sure that I didn’t start the music until we were in the clear (out of traffic). I’m a safe uber driver! Many times I made sure that the passengers and I were either i) at a stop sign when I closed my eyes (fully stopped / no one behind us or in front of us), ii) at their driveway (place of destination), or iii) at a gated place where I could do things… I was very careful. Also – a couple of them were in a a wide and enclosed gated area as I would be dropping them off. I probably got a dislike because of this. I totally understand. I care about safety first! I pay a very high premium insurance to make sure all my passengers are covered (just in case knock on wood), I’ve never been in an accident (I have been hit while at a gas station and the dude didn’t have insurance… so that was a thing). I hope you understand I just wanted to make people smile.”

My Take: Slow week for the news, so here’s a filler … 691,000 people have watched this video.  Why?  I have no idea.  Why am I promoting it?  I have no idea.  Why did I watch it?  I have no idea.  But it’s definitely a must see for anybody who has no idea what they’re doing, or why they’re doing it.

L.A. opens the door for full Uber and Lyft service at LAX

Sum and Substance: The taxi industry spent heavily to defeat it. Critics called it an unregulated dark zone. Some even questioned whether its drivers were dangerous. But in the end, those misgivings about ride-hailing could not match the public appeal of a new and potentially easier way to get to and from Los Angeles International Airport, where traffic jams are legendary and rail service is still years away. Los Angeles on Tuesday became the largest city in the nation to open the door for companies such as Uber and Lyft to fully operate alongside taxis at the airport. It was a major victory for the rapidly growing industry. As the West Coast’s busiest airport, LAX is seen as a key venue to demonstrate how the new, app-based “disruptive” technology could blossom as an alternative to driving and mass transit.

My Take:  Chaulk one more up to Uber.  Public appeal wins out over legacy systems and regs.  This is a big victory.  Harry sums this one up best in his quote for the article,  “Uber was able to build up so much goodwill with consumers that it’s almost political suicide to go against them and when you combine the fact that they have a lot of cash at their disposal, it’s very, very difficult for politicians to take any stance against them.”

Researchers Find Uber Use Leads to a Decrease in DUI Deaths

Sum and Substance: Uber may be saving your life. Researchers at Temple University ran an analysis and found that use of car-sharing services, and Uber in particular, led to a decrease in the number of homicides from drunken driving. Looking at data from 2009 through 2014 in California, Brad Greenwood and Sunil Wattal of the Fox School of Business said they found that Uber’s entry into a market reduced DUI deaths, depending on the service. Use of Uber X led to between a 3.6 percent and a 5.6 percent reduction in alcohol-related driving homicides. By noting that there are 13,000 DUI-related deaths a year, the researchers figure complete implementation of Uber X nationwide would save 500 lives annually and the economy $1.3 billion in losses. However, as the cost and complexity of service rose, Greenwood and Wattal found no drop.

My Take:  Duh … We can only hope that whoever paid for this study didn’t pay much to demonstrate the obvious.  Wait … maybe Uber paid for it.  If that’s the case, it surely was a sound investment.

What do you guys think about the week’s top stories?

-John @ RSG