What does the Uber-Lyft world look like?
Both Uber and Lyft have been garnering a ton of press recently, and for good reasons. Now that they're expanding well beyond their original markets, it's just a matter of time before both services are ubiquitous everywhere. The stars are aligned for success: both have hundreds of millions of venture funding behind them, a ton of great PR and passionate customers that love the service. You can watch the evolution as both scramble to roll out service in every large and mid-size market in the US.
For a run-down on some recent press, check out these links:
- Wired has some great background on the sharing economy and Lyft, Airbnb and more here by Jason Tanz.
- Eric Goldwyn reviews how UberX changes the game.
- Some articles on run-ins with regulators in Seattle, the Twin Cities and Kansas City.
- The impact of ride sharing for seniors and suburbanites by Paul Supawanich.
- David Levinson's personal experience using Lyft.
My interest in these matters is, as usual, how they affect the quality of life in cities, and what they do for local economies. I'd admit upfront that I'm a fan, and enthusiastic about the possibilities. I've been an occasional user of taxis and car services for years, and let's be honest: in most cities the service is terrible. And, it's been terrible for a long time. Lyft and Uber are really good services in an industry needing disruption (as the trendy phrase goes).
A few weeks ago, Uber did a test run in Savannah during St. Patrick's Day weekend, and I even experimented as a driver. I have to say, it was actually kind of fun, and extremely easy. The people were great and fanatic about Uber. As a driver, I never had to worry about taking cash or swiping credit cards, and I didn't have to pick up random people on the street. The money wasn't great, but it was pretty easy work as these things go.
Now, Uber and Lyft will tell you they aren't taxis. They call themselves transportation network providers or car services, or whatever fits the right box on a bureaucratic form. And, it's for good reason they don't use the word taxi: taxis are very highly regulated by states and cities. If you call yourself a taxi, you set yourself up for insurance requirements, restrictions on fees and hours and much more. Though the rules are set up to protect consumers from gouging, I've typically felt the opposite as a consumer: uncertainty and frustration with whether these rules really accomplish their objectives.
That all said, I do have to come down on the side of the taxi companies and local regulators when it comes to dealing with Uber and Lyft. If it walks and talks like a duck, well.... Look, like I said, I'm a fan of these companies, and really wish both would set up shop in Savannah full-time. But the desire to avoid regulation and taxation is well, let's call it what it is, childish. Many of the same people in the sharing economy world that think they should be exempt from local taxes and state laws would rightfully lambast fools like Cliven Bundy that think they should be exempt from federal laws.
I'd be the first to say that a lot of our rules and regulations need to be completely examined from time to time, and some need to be just thrown out. And, I understand that sometimes an alternate service or product has to be created to show the world how bad the current one is. You can't always work from within the system to fix it. So, we do need to find some kind of a smarter method that encourages entrepreneurism and experimentation but, when success kicks in, values fairness to all. I'm no fan of taxi companies - like I noted above, but they do live under a world of very tight rules and regulations; it's not fair to them to just allow someone new to break the rules entirely.
But like I said, I fully expect both of these services to overcome the current issues they're experiencing city by city and state by state. It's inevitable. They're both very popular, and very good. They have the money to sustain a long-term push uphill. It will work itself out, even if they and their fans experience frustration in the short term.
The interesting question to me is, what then? What does it look like when Uber and Lyft are in fact everywhere? Clearly these two companies, and perhaps another start up or two, will put a LOT of taxi companies and transportation providers out of business. These are game-changers, and perfectly suited to American cities and the American consumer. Just like Starbucks took the upscale coffee world by storm, so will these. Of course, as Starbucks became ubiquitous, it also morphed from a coffee shop to a sugary-drink, coffee milkshake company. What will happen to Uber and Lyft?
A few theories I've been throwing around with colleagues:
- Transit providers will lose customers of choice. With a modern ride sharing service, even at a higher cost, more people in smaller and mid-size cities will choose it vs riding the bus.
- Smaller cab companies will disappear. Most will not mourn this, but it will be a sea change in the urban experience.
- The services will be a boon to walkable areas. For those cities that are not New York or San Francisco, but desire to be more urban and walkable, these are transportation providers that enable the lifestyle much more. It comes at a price, but it's still cheaper than owning a car and driving, and soooo much more convenient than calling cab companies today.
- As the Atlantic Cities article above referenced, when older customers learn about this and use it, it will enable better mobility options for them as well.
- Of course, the more ubiquitous they become, the more pressure will descend upon them to accommodate the poor, the disabled, etc. It's entirely possible these could become semi-independent transit operators in smaller cities.
- Completely unknown to me: when it hits the mass market, and is no longer something catering to the niches that love it today, how do they change? Will they become more centrally managed? How will the rating and trust mechanism work when 300 million people are users?
But like I said, these are just a few theories. What do you think? What does the world look like when ride sharing is as common as your neighborhood Starbucks?