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Sharing economy companies have truly changed how we visit destinations, how we stay there, and how we move around.
Services such as Uber and Airbnb have taken the best of the web, mobile, and social to create travel products that allow people to find rides or places to stay with an ease that was previously unheard of. Their success has shown the errors of regulation in some areas, as well as demonstrated that hubris and a disregard for local laws isn’t the hinderance to success that one would assume.
Will they live up to the $10 billion-plus valuations we see at Airbnb and Uber, will they be snapped up by older companies hedging their bets, or will they go the IPO route and seek Facebook-like validation for their products?
In this two-part series, we are looking at the poster children for the movement: Airbnb and Uber. Last week was Airbnb. Now it’s Uber’s turn.
The Case for Uber
We’re on the record doubting whether Uber will really be worth the tens of billions of dollars its backers are betting on. And we haven’t hesitated to say that CEO Travis Kalanick has all the grace of a rabid bull in a china shop.
Uber is still facing lawsuits and angry regulators in multiple markets, but it has made significant progress in major markets like New York City where it turned away from a who-cares attitude and now is the poster boy for working with regulators. Internationally, it still has to deal with European regulators and Asian competitors that have a huge head start. And then there’s the insurance issue that they have yet to nail down. But it’s in a good position nonetheless.
Like other sharing economy companies, Uber will need to put practices into place to abide by anti-discrimination laws, and it also needs to do more to make sure it is compliant with The Americans with Disability Act. Doing so will signal that Uber is ready to compete on equal footing with am equal respect for all its potential users.
Here’s how Uber made things better:
Finding a ride is easier than ever: Here’s a typical use case. You’re finishing up dinner and want to get a ride. Fire up Uber as you’re settling the bill and you’re likely to have a car waiting for you when you get to the curb. If it’s not there, you can see how far away it will be.
Hailing a cab isn’t incredibly onerous in a big city like New York, but non-densely populated cities — basically nearly everywhere else in the U.S. — make taxi discovery a challenge. With Uber, drivers can see where riders are waiting, and riders can gauge how long it will take to be picked up. The genius of smartphones put to good use.
Paying is easier than ever: No excuses like “the credit card reader is broken” or “I don’t have change for a $20.” You simply pay with your stored credit card.
Shady middlemen get cut out: Whether it’s transportation, hotels, or tours and activities, there’s a lot of friction in the travel industry that slows down business and is simply there because it’s been there for a long time. Set aside for a moment that some Silicon Valley VCs could fairly be called “shady middlemen,” Uber takes power away from taxi companies and medallion-leasing companies that cut into the profits of drivers and doesn’t serve passengers much either. In New York, many cabbies will tell you that the first ten hours of their twelve-hour shifts goes to paying off these entities.
Uber’s 30% cut is hefty, but it streamlines the minor fleecing to a point where it’s nearly painless. For a certain kind of driver, this puts them in a position of control that they’ve never had before. And it’s a nightmare for a certain kind of middleman who makes his money turning the screws on the largely immigrant class of drivers that work their butts off six days a week.
The providers get paid: Drivers prefer being paid to not being paid, by riders and taxi companies alike. Those riders who used to split instead of paying? Impossible with Uber. Drivers also get paid once a week via direct deposit.
No more hassling with a Danny Devito-like character back at the taxi pool.
That rental car may not be necessary: That car you used to rent to get from the airport to the hotel to that one meeting and back again? Forget about it. Smart business travelers can easily do the math and figure out the most cost efficient way to get around. What would have once been a hard thing to get past accounts payable (a town car, really?) is all of a sudden within grasp. And it’s even easier now thank to deals with companies like Concur and American Express.
Ground transportation is safer: Yes, we’ve heard the stories of crazy drivers. We’ve also been hit by a yellow taxi, screamed at by a traditional black car driver, threaten by a car service driver, and for those of us who are of color, been ignored by multiple rides. While getting a yellow cab driver off the road is harder than getting a union teacher with seniority kicked out of class, Uber’s ruthlessness lets them cut a driver faster than your favorite character on “Game of Thrones.”
The reciprocal review system that works so well at Airbnb works well here, too. Now they just need to prove it can scale.