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Can Uber Car Service Revolutionize City Transportation?

Yahoo Finance | 03.11.13

 
The following article first appeared in Yahoo Finance on March 8th.

Ask anyone who lives in or tries to get around in a major city and they'll tell you any number of stories about a hellish commute, difficulty getting a cab in the rain, or navigating a tricky subway system. This is exactly why on-demand car service, "Uber" is getting the green light to expand in cities all around the world. Their goal is simple: turn your travel headache into a luxury experience while they make a profit.

"At the beginning, me and my cofounder just wanted to push a button and get a ride and we wanted it to be a classy ride," says CEO Travis Kalanick. "Go to a restaurant, get out, push a button, within five minutes an S-class rolls up and everybody's like, 'how the hell did that happen?'"

Using an app on your mobile device you request a ride and a couple taps of the finger later a black town car is dispatched to your location. It's a simple idea that has caught on in a big way. The company began in San Francisco and in about two and a half years has grown to 30 cities around the world. From New York and Chicago to Paris and London. Just last month the company entered the Asian market, launching in Singapore.

Service fares begin with a base fee. From there, similar to standard cab fares, if you travel above 11 miles per hour fees are based on distance. If traffic slows you down fees are based on the time you spend in the car. Prices also fluctuate based on demand in the city you're in.

The average rider's of pocket cost is about 40-50% more than a standard cab, but so far customers aren't having any problem paying for the convenience.
"In one year we're going to be pushing up against 100 cities," says Kalanick, "not just with our black car service but also with what I like to call low cost Uber. We're going to be providing multiple options in every city for people to get around.

Some cities, like San Francisco, already have these multiple cost options in place. You can choose from standard taxi's that have joined the Uber system, luxury SUV's and multiple levels in between. It's a business model that caught the attention of the Washington DC city council when Uber rolled into town.
Kalanick says the city council was "trying to find ways to stop us with the existing regulations and they tried to pass laws that would basically put floors on our prices that was five times that of a minimum of a taxi. Our users spoke up and made sure that they were heard and in doing so stopped those kinds of efforts."

Now that the hurdles have been cleared in Washington Uber is setting their sights on New York City cabs. The company had planned to test a program where New Yorkers could "e-hail" a ubiquitous yellow cab from their smartphone. Livery drivers have protested the move and now a judge has temporarily stopped them pending a court hearing later this month.

City by city issues aside, the real question for Kalanick is where he sees Uber long-term. He says:
"if we just keep creating new things that people love that are really fun to build then I feel like I'm doing my job and this company we're doing our job. We're going to grow to be really big and maybe at some point that means we go public but right now I'm so focused on the building that I'm not really focused on the cashing out if that makes sense."

Regardless of the future the company has already proven they can disrupt transportation in some of the world's laregest cities and they show no signs of stopping.

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