There’s a lot more to like about Uber than the price
I caused a bit of a stir on Twitter recently when I Tweeted about my Uber driver’s lack of knowledge of the area he was driving in during our journey back to the office. It was misunderstood by the majority who read it, but 69 retweets, 17 favourites and a torrent of abuse from the London black-cab community later and I had lost energy in trying to defend my argument.
The truth is that I was actually highlighting the fact that my drive
r’s lack of knowledge of the London streets doesn’t really bother me at all. I don’t order an Uber for “The Knowledge” and the pleasant conversation I usually encounter when I hail a London black-cab, it’s a different service entirely. I would be lying if I said that the lower price isn’t the leading factor that draws me to use the app, but there’s a lot more to like about Uber than just the price.
I have followed Uber’s meteoric takeover of the taxi industry with keen interest. They’ve sent tremors running through every business that thought they had monopolised an industry. Uber took on a mature market and proved that there really are no barriers to entry anymore.
It’s the technology that underpins their business that I find really fascinating. A couple of weeks ago my delayed train stumbled into Euston leaving me running late for a meeting. With time against me I ordered my Uber with 5 minutes remaining until I arrived on the platform (the average time I wait when I order from Euston). As I strolled through the station to the road I watched gleefully as my Uber turned the corner to meet me at the exact time I arrived. “That was lucky”. Well actually, no it wasn’t. Uber doesn’t really work on luck, it works on data.
Uber – like AirBnB & Netflix – have created powerful closed-loop feedback systems. When customers use their products and take an action (open the Uber app, tell it where you are and order a taxi), all of the data from that interaction is captured and fed back into the system to improve the next customer’s experience. So Uber knows the exact supply and demand for a taxi ride in a given city in real-time, allowing it to optimise pricing for rides and match demand (taxi requests) with supply (cars) to make the market more efficient.
One of my initial issues I had with Uber was their controversial surge pricing that seemed to punish their customers by increasing their prices during busy periods – seemingly every time it started raining! But when you look closer the reason they do this is justifiable and, again, is driven by data.
Their surge pricing isn’t necessarily in place to maxmise their top line revenue, it’s to optimise driver earnings while efficiently matching supply and demand for transport. By increasing the prices for busy periods it offers more earning opportunity to the drivers thus incentivising them to hit the road to balance supply and demand. In other words, Uber’s surge pricing doesn’t just make rides cost more, it makes the overall taxi market more efficient so drivers capitalise their revenue and more people can get an Uber.
I am aware that this post has painted a very favourable view of Uber, but don’t get me wrong, I am more than aware that Uber isn’t without its problems; passenger safety being one of them – it will face an important and ongoing battle to ensure passenger safety is paramount and that their drivers are well vetted. However, placing these problems (and my love of the iconic London black-cab) aside, I can’t help but be drawn to Uber as the first port of call when I need a taxi. Even more so now that I can stream my Spotify playlist directly into my unfortunate Uber driver’s car for the entire journey. Now that is unlucky!
Co-Founder & CEO