For the past several years, I’ve seen Uber grow from a scrappy startup to an enormous success based right here in San Francisco. In the Fall of 2013, the company was “only” valued at $3.5 billion. As of July 2015, Uber is now valued at roughly $50 billion! Instead of driving for them, the best way to get rich would have been to work for Uber when it first started in March 2009.
Jabir, the “richest poorest person I know” actually became an Uber driver a couple years ago. He was unemployed for almost three years with a wife and daughter to support. It didn’t matter what time of day it was, he was always available to play tennis. We’d also drive all around the Bay Area to watch struggling professional players battle up the ATP points ladder for eight hours a day sometimes. As tennis junkies, we were in heaven!
Then one day Jabir stopped being available. No longer could he play pick-up tennis at Golden Gate Park at 2pm. No longer could he be my pal when everybody else had to work, so I had to find a new friend to pass the time after my morning writing was done. When I asked him what was up, he responded that he decided to drive for Uber.
For the next 12 months, I didn’t see Jabir at all. He drove ~10 hours a day for six days a week like a mad man. It was as if he was making up for lost time. When I asked him how much he was pulling in, he said well over $7,000 a month. Not bad coming from $0.
Uber allowed my friend and many other unemployed or underemployed people to find a way to earn some money and improve the inefficient taxi system in San Francisco. The disruption has been huge. I was even considering driving for them during my spare time, but Moose was too old as a 2000 Land Rover Discovery.
Starting in early 2014, Jabir began to come out and play again. When I asked him how were things going, he said that he was no longer driving for Uber, but driving a black SUV for a specific hotel instead. “Sam, I was getting too tired driving all those hours. Hotel driving is so much easier. Also, Uber kept cutting its prices so I was only making like $3,500 a month. It wasn’t worth it to me anymore.”
Jabir actually started outsourcing his car to his brother to drive for Uber so he could start collecting a percentage of his earnings and free up time for him to drive for the hotel. Smart man. There’s passive income opportunities everywhere!
TRANSPORTATION BATTLE = WIN FOR CONSUMERS
I am a proud public transportation rider to the slight extreme. For example, back in the days when I was making the big bucks in finance, I would wait 30 minutes for a bus to get home than pay $15 for a cab. I just felt stupid paying 7X more for transportation. Instead, I would read some articles on my iPhone or call my parents to catch up. I also had an endless amount of stuff online to do, such as respond to comments, share posts over social media, and write my own posts. These two thumbs have typed 1,500 word posts on the phone before!
But at some price point, it no longer makes sense sense to wait because time is the most valuable commodity after all. It’s also very frustrating to call a cab company and have the cab not show up because he decided to pick up a more lucrative passenger or whatever reason. So when Uber came out with UberX, I started to get more interested.
Uber originally began with black Lincoln Towncars – you know, the ones you see executives in suits get chauffeured around in. It was seen as an exclusive way to get around. Although the cost was higher than a taxi, it was still much lower than having to rent a Towncar by the hour or day. Uber’s exclusivity really started attracting folks from all over who aspired to also ride in black limos.
The funny thing is, I didn’t care at all about the exclusivity because I started my Towncar-riding the day I graduated from college as a lacky on Wall Street. If we worked after 8pm, we got to expense a Towncar home. If we had to go to midtown for a meeting, we got to expense a Towncar. If management from a private or publicly traded company was in town, we were definitely using a Towncar. If I had to deliver some presentations to my VP who didn’t bring enough, I used a Towncar. To me, Towncars were like Honda Civics, ubiquitous.
The introduction of UberX really started lowering prices and changing the transportation landscape forever. UberX allows anybody with a 2004 or newer car who passes all Uber requirements to become a driver. The ride that used to cost $15 now only costs ~$9, a 40% decline. Furthermore, Uber recently started UberPool, which is a car pooling system that cuts prices by an additional 30%-40% or so as well.
The one thing you need to watch out for is surge-pricing. Uber will raise prices based on demand during rush hour or big events like ballgames or concerts. Although the pricing is controversial, it makes perfect sense as an economics guy. If you don’t want to pay, take the bus, sign up with a competitor like Lyft, bike, or walk. Complaining about surge pricing is silly because nobody is forcing us to pay for anything. The concept is similar to airline ticket pricing. Plan in advance to save money.
The other thing I like about Uber is that you never need to use cash, swipe a card, or calculate tip anymore because the rides are linked to your account with pre-determined settings. Once you set up your account online by entering your name, credit card information, and ride preferences, you’re set. There is no tip necessary for Black, SUV, or UberX as its baked into the fare. You simply hail an Uber on your smartphone, track the car’s progress, tell him where you want to go, and get out once you’ve arrived. See pics.
I can’t tell you how many times I’ve been stressed having to wait for the cab driver to pull out his manual card reader because his electronic card reader doesn’t work when rushing to catch a business flight. It’s my own fault for always getting to the airport 45 minutes before takeoff, but time is precious and I’m trying to squeeze as much productivity as possible during my day. After taking several hundred business flights in my career, I’m pleased to say I’ve never missed one!
DISRUPTING FOR THE GREATER GOOD
The funny thing about Uber is that it broke the rules to get to where it is now. You can’t just start an app and get folks like me and you to become a taxi driver and improve transportation for everybody. There’s always fees to pay the government and regulations to follow. But Uber figured out that at the end of the day, local governments just want money and power. So long as the drivers are properly trained, all Uber has to do is give the government a cut of their revenues and allow for some oversight. Every new innovation breaks rules, otherwise, nothing would ever move forward.
Firms like Uber and TaskRabbit (also founded in SF) are providing sorely needed jobs countrywide and worldwide now. There is a huge underemployed population that is struggling to make ends meet after the financial crisis. Uber is uncovering productivity and meeting demand.
I’m rooting for more transportation disruption because gas prices are so high, parking tickets cost too damn much, and driving in traffic is my most hated activity. Life is too short for road rage. Uber has also helped me make a decision on what car I will purchase next. Stay tuned.
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Updated for 2017 and beyond.