Published on July 17th, 2018 | by Steve Hanley0
Uber Plans To Become The “Amazon For Transportation,” But Are Cities Ready?
July 17th, 2018 by Steve Hanley
Speaking at Recode Decode conference in May, Uber CEO Dara Khosrowshahi said, “Let’s create a cheaper form of transportation from A to B, and for you to come to Uber, and Uber not just being about cars, and Uber not being about what the best solution for us is, but really being about the best solution. Just like Amazon sells third-party goods, we are going to also offer third-party transportation services. So we wanna kinda be the Amazon for transportation.”
While Khosrowshahi has gone all touchy feely in his attempt to repair the damage done by founder Travis Kalanick, the company is still battling against the notion that its drivers are employees and not independent contractors. The city of San Francisco recently issued subpoenas to Uber and Lyft for records as it wrestles with precisely that question. The answer could cost the companies millions of dollars if it is found that drivers are actually employees and they are required to provide employee benefits to all their drivers.
Khosrowshahi’s vision represents an end-to-end plan to help people get from point A to point B using the Uber app every step of the way. Uber purchased bike sharing startup JUMP in April. Now it has invested in Lime, the electric scooter startup that has more than 35,000 scooters, bicycles, and e-bikes deployed in 70 markets across the US, according to Angel List Weekly. Uber users will soon be able to rent Lime scooters directly from the Uber app and all of Lime’s vehicles will be co-branded with the Uber logo.
“Whether it’s taking a car, whether it’s taking a pooled car, whether it’s taking a bike, whether you should walk or even now we want to build out the capability for you to take a bus or subway,” Khosrowshahi told CNBC after the Recode event. “We want to be the A-to-B platform for transportation.”
For longer trips, Uber has partnered with Getaround, a peer to peer app-based service that pairs people who own cars with people who want to rent cars, while continuing to expand its ride hailing services in urban areas. According to Tech Crunch, Uber is considering an alliance with Careem, a ride hailing service based in Dubai, and there are also rumors that it is talking to Ola, a ride hailing service in India, about a partnership or acquisition. Bikes, scooters, and Uber Pools will all serve the “last mile” of transit — quick trips between hubs like bus stops and subway stations. Uber has even partnered with public transit ticketing startup Masabi to sell tickets directly within the Uber app.
Things are so rosy for Uber right now, the company is starting to think about an IPO in 2019, says Gizmodo. “We’re in a good position in terms of the company’s profile, in terms of profitability and margins continue to get better,” its CEO told CNBC. That’s despite continuing headwinds from the bad taste left over by departed founder Travis Kalanik, who Gizmodo refers to as a “forever asshole.” The stench left behind after Kalanick was forced out last year remains.
In a recent CleanTechnica article about Waymo, several people left comments about Kalanik and Uber that capture the negative public sentiment perfectly:
“Ruthless is exactly the right word. Uber hasn’t even made a profit or paid taxes but it has continuously lowered driver rates to the point where they average $8 and hour or less or even lose money,” said eveee. André Balsa wrote, “You have to understand that Uber is the darling of investors because it is based on one of the basic tenets of capitalism: the ruthless exploitation of unregulated labor on a global scale in monopolistic fashion, hence the promise of extraordinary profits. Uber is a horrendous brand. They are a perfectly despicable multinational company.” It seems the company has a ways to go yet before regaining any semblance of being an ethical company — not that ethics have much to do with the world of finance these days (assuming they ever did).
Bird Raises More Than $100 Million
Lime has a number of competitors, the biggest of which is a startup from Santa Monica, California, called Bird. It is led by Travis VanderZanden, who learned at the knee of the master of boorish behavior, Travis Kalanick, during his time at Uber. The model for disruptive entrepreneurs today is apparently to try to be the biggest jackass possible. That’s what investors love, apparently, as Bird in the last few months has raised over $250 million from the venture capital community as it heads toward “unicorn” status — a startup valued at more than $1 billion.
Like Uber, Bird follows the “asking permission conveys the power to say no,” mantra. It burst upon the scene by suddenly putting hundreds of electric scooters on the streets of Santa Monica before doing the same thing in other cities, including San Francisco. The company is now quietly sponsoring a bill in the California legislature that would allow scooter riders to operate anywhere without a helmet, according to CNET. The bill would also eliminate the requirement that users have a valid driver’s license and raise the maximum speed allowed for the scooters to 20 mph.
The company claims it does not need any business licenses to operate and does not have to give city officials notice it is about to begin operations. That attitude has earned it outright bans in Salt Lake City, Denver, and San Francisco. The Kansas City Star notes that Bird caught officials there by surprise and admonishes it to “play by the rules.” Of course the core of all start ups is to do quite the opposite and Bird is no exception. What is it with people named Travis, anyway? Do they suffer from some sort of genetic brain defect?
Lyft Also Goes Multi-Modal
Lyft is chasing the same multi-modal rainbow as Uber. Curbed reports the company recently invested $250 million in Motivate, the largest bike sharing operator in the US. In a blog post, it said it “will invest to establish bike offerings in our major markets and pursue growth and innovation in the markets where Motivate currently operates.” Lyft co-founder and president John Zimmer said in a statement, “Lyft and Motivate have both been committed for years to the same goal of reducing the need for personal car ownership by providing reliable and affordable ways to move around our cities. Bringing together Lyft and Motivate will accelerate our collaboration with cities and deliver even better experiences to our passengers and riders.”
The impetus for all these mobility schemes is that ridership is expanding rapidly in US cities and around the world. The National Association of City Transportation Officials says 35 million bike-share trips were taken in 2017, an increase of 25% over 2016. The latest household travel survey conducted by the U.S. Department of Transportation finds 35% of U.S. vehicle trips last year were two miles or less — ideal for new options such as dockless bikes and electric scooters. Lyft at least is discussing its plans with the cities it operates in, rather than dropping in unannounced and telling city officials, “We’re here. Deal with it.”
The driving force (you should pardon the expression) behind all these new mobility services is the fact that more and more people are moving to cities — communities that are already overcrowded with cars, trucks, taxis, limousines. buses, and trolley lines. Despite a plethora of choices, people find urban congestion makes it difficult to move around. Owning a car in the city is pretty much a fiscal impossibility in many urban environments today.
Dropping several hundred or several thousand bicycles, skateboards, scooters, or pairs of roller skates into a city with no prior consultation with city officials seems arrogant, ignorant, stupid, and possibly illegal. There is no planning for where the vehicles will be picked up or dropped off, who will recharge them, or who will fix them when they break. The Kansas City Star reports that Bird did not start recruiting people to handle those chores until a few days before it began its program, which seems incredibly dumb for a business that thinks it is going to amount to something.
The biggest issue is how to redesign city streets to accommodate the influx of new mobility devices. Cities decided long ago to devote as much space as possible to automobiles. Any traffic engineer will tell you that it’s not speed that kills, it is the difference in speed between vehicles using the same transportation corridor that causes injuries and death. A typical car weighs 3,000 pounds or more. There is no contest between a car and a person on a bike or scooter — the lone bike or scooter rider is likely to get seriously hurt, even in a minor collision. And the jackasses at Bird don’t want their customers to wear helmets? Are they insane?
“By the end of this year, renting bikes and scooters will be a mainstream transportation option readily available to tens of millions of people in over 100 U.S. cities with the tap of a finger — and offered as part of trip-planning itineraries that include bus, rail, and ride-hailing,” according to Curbed in an article titled, “Don’t ban scooters. Redesign streets. Cities are regulating mobility startups, but ignoring the real problem — there’s still too much space for cars.“
That article begins, “The need for safety infrastructure was already urgent — but it’s especially urgent now. The U.S. streets that have not adequately planned for bikes for decades — most of them — will soon welcome even more types of wheeled vehicles. And the sidewalk — which has become the flashpoint in these conversations — is already far too narrow and poorly maintained in most cities to accommodate the needs of most walkers, let alone scooter operators afraid to ride in the street.”
Drivers are pre-conditioned to simply not see pedestrians, bikers, scooter riders, and skateboarders. Conversely, people who use alternative forms of transportation often act as if they have a constitutional right to use city streets any way they see fit. In recent memory, I have been screamed at by bicycle riders for violating their perceived space.
One zoomed by me on the left at an intersection where I was attempting to turn left while my attention was focused on traffic coming from my right. Another took umbrage when I pulled to the curb to pick up my wife. Providence, Rhode Island, recently made a bicycle lane next to the curb. I confess I was unfamiliar with proper etiquette in that situation but didn’t really see why I shouldn’t pick my wife at the curb the way I have done for the past 50 years.
In both instances, the riders braked hard and turned around so they could come back and scream vile things at me. People who are riding a 50 pound bike should not hurl insults at people riding in 3,000 pound automobiles. Not everyone is as courteous and even tempered as I am. Having road rage while riding a bicycle is like threatening someone toting a bazooka with a pea shooter.
At the very least, there needs to be distinct travel lanes for those bicycles, scooters, and skateboards — lanes that vehicular traffic cannot invade but a problem still arrives at intersections. Many different designs have been proposed to protect riders from turning vehicles. One of the best is in Vancouver, according to City Lab.
But nothing will protect petulant and impetuous riders who ride with an “in your face” arrogance toward other people using the same street. To get respect, you must first give respect. Bicycle riders get all bent out of shape at joggers who use bike paths and people on electric bikes. Their arrogance is frankly infuriating and an open invitation for a punch in the nose, which in many cases would be richly deserved. Travis VanderZanden sounds like he might be a likely candidate for one as well.
The Trouble With Tech
The modus operandi of most tech companies is to stomp around and break things. Disruption is seen as a good; cooperation is bad. Stamp your feet, make a lot of noise, then sell out to the highest bidder and start all over again. It seems highly unlikely the problems with urban transportation are going to be solved by such a confrontational approach.
And while bike sharing and electric scooters may be dandy in Santa Monica — because it never rains in southern California — it’s hard to see many people choosing to use either mode of transportation when it snows, sleets, or rains and the streets are choked with ice. Ultimately, both Uber and Lyft are seeking to take the money people spend today on car loans, insurance, gas, repairs, and parking and put it in their own pockets.
It’s an intriguing idea that may prove to be highly lucrative, but there is much work to be done first. It’s time for them to take their eyes off the golden cash register they imagine is waiting for them at the end of the road and get down to the hard task of solving the challenges of urban mobility crisis in our ever more densely populated cities. People are not entitled to become billionaires just because they came up with an app. They still need to make money the old fashioned way — by earning it.