I  flew into Houston Hobby Airport a few days ago, touched the Uber App (i had set up some time ago).  I put in the destination and It said there was a ride two minutes away.  I learned that even if the driver is standing right next to you it will say they are two minutes away. This was my first Uber booking.

A nice face shot of Lateefah and her license plate showed up also noting she had a Honda Pilot. (you can spec SUVs and Black Cars if you want a more limo style ride.)  She had just dropped off a fare at Hobby and responded literally in seconds (they have 15 seconds to respond).  She quickly called me to establish a rendezvous,  I noticed the phone number was a Cleveland number.  She explained that was because it was provided from Uber.  The App also quoted the fare as between $20 and $28 depending on traffic and delays.  It ended up being $22.12

After I was dropped off the fare is charged to my credit card.  No cash changes hands, no tips.

I was able to see a rating of Lateefah before I accepted .  She had a 4.8 out of 5.0.  I gave her a 5.0. The drivers also rate the passengers.  If you are a rowdy trouble maker who has thrown up in a cab, you may have a tough time getting a ride.  Lateefah will not pick up a low rated passenger.

Drivers with a lot of customer complaints get yanked.  Lateefah said some cabbies who have driven for years bring bad attitudes with them when they drive for Uber and do not last long.

In Houston a low end ride – the Uber X charges $1 base, $.15/ minute, $1.10 per mile, a minimum of $5 and a cancellation fee of $6

The Uber XL (bigger car)- $2.85 base, $.30/ minute, $2.20 a mile, $7 minimum and $6 cancellation

The Black car (Luxury – Cadillac/ Lincoln/ Mercedes)- $7 base, $.35 a minute, $3.45/ mile, $15 minimum and $10 cancellation.

The SUV- $14 base, $.45/minute, $4 per mile, $25 minimum, $10 cancellation.

The final charge is computed by Uber and a invoice is on your phone within a minute of reaching your destination. Your then rate your driver from one to five stars.

The big losers are clearly the cab companies which are slow to respond and generally a poor quality ride.  The rental car companies will also take a hit.  I would rather Uber than rent, if it is an Uber friendly city.  Less stress, no hassle or time wasted at the rental car kiosk(even thought this has been streamlined quite well) and no parking fees  Short Hertz and Avis.  No more worrying about getting ripped off with their gas reimbursement or insurance charges, or worrying about how to find the drop off when you return to the airport.

The winners are consumers who get a whole new level of quality and service that was not there before for a wide market.  Downtown bars and restaurants benefit from customers who no longer choose between driving and drinking or staying at home.  Safety improves. You can afford a bit of luxury by getting a Black car on very short notice (literally minutes)  without having to book a limo for an entire evening. Uber offers more than a replacement for a cab ride.  It is a whole new experience.

Uber has unleashed  idle asset and thus created an opportunity for thousands of car owners who would like to supplement their income.  Most of the drivers were part time, or were able to work whenever they wished.  They were given an opportunity to run their own business.  They had to meet certain standards but their real boss was the passenger and their very simple and very timely rating system.  Bad customer service and you are quickly out of job. Imagine that level of accountability with your cab experiences.

I had two more Uber experiences before I left Houston and both were great. The App allows you you to see how many vehicles are in the area and the approximate wait times.  You can check on the various quality rides: X, XL, Black Car r SUV, and see which one will get to you faster.

Uber has fostered a community.  If you had presented to me a business model that consisted of an App to allow me to quickly contact a perfect stranger in an unmarked car to transport me in a strange city, I would never have given it a chance.  I would have been very wrong.  The highly regulated taxi business is understandably outraged at this new unregulated competition.  The biggest loser may not be the cabs, but government regulations of the industry and the income this regulation generated.   The rapid growth of Uber has caught regulators off guard.  The conflict is more than between Uber and the cab companies; it lies more predominantly between the Uber Community (independent drivers and very satisfied customers) and government regulators.

Uber now has a market cap of $18 billion.  AirBNB is the Uber of the hotel business and this story is largely repeated there.  I imagine the users are largely younger and will have a new more involved look at the impact of regulations on their lives.

Uber seems a near perfect name from a marketing perspective.  They now own the word and it has become synonymous with the industry.  You do not call a”private contractor transportation service”, you “Uber” a ride.  A marketing dream name.


From The American Interest, Piece by Piece, The Blue Model Sickens and Dies

 The old regulated taxi system was one of the classic examples of the blue model system: a regulated, quasi-monopoly that seemed to many people to be the best and indeed the only way to combine the ideals of protection for consumers and a decent living for providers of services. Over time the taxi system everywhere tended to become less effective if only because of a tendency toward regulatory capture by crony capitalists—often, owners of companies who owned many of the artificially limited taxi medallions—who channeled campaign contributions and other sources of influence into focused efforts to limit the supply of medallions, raising prices for consumers and, often, leading to low incomes for the drivers who had to lease medallions at high prices from the handful of sources.

Consumer discontent with the old system, plus driver discontent (many drivers report better earnings and more flexible incomes from the internet-empowered dispatch services), plus the technological advancements and creative entrepreneurial thinking that mades it possible for Uber and Lyft to replace both Manhattan style street taxis and the car dispatching services found in many other cities, is now driving the destruction of the old system.