Questions About Uber

In the next 90 days, it’s expected Uber, the leading start-up “i-ride” service, will raise another significant round of funding and shockingly become worth more than General Motors. The high value of Uber is surprising when considering the company owns no cars, and technically employs no drivers, and their service is essentially a massive repurposing of the cars already owned and in use. Uber, however, is facing pushback in numerous key world cities, which makes one wonder if Uber will be the new mobility leader 10 years down the road, or be the forgotten AOL of the new mobility future? Do you remember hearing “You’ve Got Mail” when signing in to your email account in the early days of the Internet? Not many do.

Uber’s stunning growth along with its challenges have created one of the biggest new business stories of our time. In six short years, the company has expanded from a small service in San Francisco to a global mobility network comprised of 160,000 drivers providing nearly 2-million rides a day in 290 cities around the world. 

There are certainly a large number of trouble spots for Uber on a range of issues. I expect Uber has more lawyers on staff than any start-up in history. Cities have concerns over driver safety, taxi regulations, employment law, and new concerns are actually being raised that Uber is worsening urban traffic congestion in some cities. All these “headwinds” make me think of the early days when Henry Ford was introducing a new mobility paradigm: the automobile. He would pave 1 mile of road in a city for people just to get a taste of how great a car could be with a proper road network. 

I sometimes hear people calling Uber a “taxi service.” I think it’s much more than that. In fact, I refer to Uber as the “taxi company by God”. One of the first departments the Uber CEO created was the company’s “Math Department.” Top computer scientists are hired to develop algorithms to predict, for example, where the next ride request would likely come from so that Uber drivers could position themselves for the next likely ride request. This vastly reduces response times. Los Angeles has minimal taxi services, as do hundreds of other world cities. And in these locales, you simply can’t compare the vastly superior service of Uber to a taxi. It’s so much better. 

While Uber has expanded rapidly around the globe, I wonder about the value of their global network to the average consumer. Most mobility consumers travel within the metropolitan region they live in each day, and most do not travel to other cities. We expect Google, for example, to offer us information from around the globe, but the roughly 10-million people in Los Angeles County will be traveling within LA each day and don’t really care if Uber is operational in another country or even another state in the U.S. Given Uber’s technology is not proprietary, could Uber be disrupted on a city-by-city basis from a new competitor? It seems possible.

Uber also seeks to transition to self-driving cars in the future. Since Uber drivers currently own their cars, this will require a new business model. I was also surprised to read recently that Uber’s CEO is interested in buying as many autonomous Teslas he can get his hands on. He seems unaware that the low-slung Tesla is more difficult for riders to get in and out of than many other types of (taller) vehicles. I suggest he should look at the Rinspeed MicroMax group mobility concept vehicle from a few years back. A design like this allows for super-easy ingress/egress, all in a tiny, easy-to-navigate-city-traffic footprint. I do not get a sense Uber understands vehicle design and its role in long-term market leadership.

I also found the recent blogs from Uber investors interesting, as they have been discussing how “UberPool”, the new ride-matching service, can lower the price of mobility for consumers. These are very smart investors, but I feel they miss the “cultural inertia” of automobile ownership in the United States, and what’s required for consumers to sell off a household car for new mobility services. 

Dan Sturges is mobility design consultant for team red and has been supporting “transformative” transportation projects for nearly 30 years.  He trained as a car designer, worked as an entrepreneur to bring to market a new intermediate vehicle category. He supports a wide range of vehicle design and mobility planning efforts for both government and corporate entities.