UBER

June 7, 2015


If you read my posts you know I definitely enjoy keeping up with technology:  advances in existing technology and certainly new entries into the exciting world of STEM (Science, Technology, Engineering and Mathematics).  I know I’m saying the obvious, but the digital age has made possible a remarkable variety of useful and labor-saving apps (application software).  These digital packages of code produce web sites that seemingly provide information instantly.

Some months ago, my wife and I visited our youngest son in Dallas.  He furnished transportation from the airport but for the remainder of the visit we used the services of UBER.  This was our very first experience with the UBER service.  We found it to be remarkably convenient and considerably less expensive than a traditional cab ride.  Very fortunate our son “turned us on” to this company. Let’s take a look.

HISTORY:

A very brief summary of UBER may be seen as follows:

BRIEF SUMMARY

The idea for UBER was developed by Travis Kalanick.  Mr. Kalanick was trying to find a cab from his hotel to the 2008 LeWeb conference in Paris, France.  He had significant difficulties in doing so.   Kalanick cites “Paris as the inspiration for UBER “.   The original company was named “UberCab” by Travis Kalanick and Garrett Camp in 2009. The service was launched in San Francisco in June 2010, with Ryan Graves appointed as CEO.  Graves later stepped down from that role to become VP of Operations and was replaced by Kalanick.   UBER’S mobile app for iPhones and Android phones was launched in San Francisco in 2010.

The company markets and operates the UBER mobile app, and allows consumers to submit a trip request.   This request is then routed to sharing economy drivers.   As of May 28, 2015, the service was available in fifty-eight (58) countries and three hundred (300) cities worldwide.   Since UBER’S launch, several other companies have emulated its business model, a trend that has come to be referred to as “Uberification”.

The company initially raised $49 million in venture funds by 2011 and beginning in 2012, expanded internationally.  In 2014, UBER experimented with carpooling features and made additional updates. UBER continuously raised supplemental funding, reaching $2.8 billion total funding by 2015. Many governments and taxi companies have protested UBER, alleging that its use of unlicensed, crowd-sourced drivers was unsafe and illegal.  Even with this being the case, it is estimated that UBER will generate 10 billion dollars in revenue by the end of 2015.

THE FOUNDERS:

Travis Kalanick (pictured below) is the CEO of UBER Technologies.  UBER competes with taxi services across the U.S. in fifty-three (53) many countries around the world. The often-controversial company is banned in several countries including Spain and was temporarily banned in India due to issues with regulators and safety concerns.  In early 2015 the company said it would step up its cooperation with city governments in Europe, where it plans to grow. FORBES estimates that Kalanick, a UCLA dropout, owns at least thirteen percent (13%) of UBER, his third startup. His first venture, an online file-exchange service, was sued by the Motion Picture Association of America and the Recording Industry Association of America before filing for bankruptcy in 2000. His second company, a file-sharing company called RedSwoosh, was sold in 2007 to cloud computing company Akamai Technologies for $18.7 million in stock.

Travis K

Garrett Camp is the cofounder and chairman of UBER.  As mentioned earlier, UBER has seen its valuation grow ten (10) fold in the past eighteen (18) months to a whopping $41.2 billion.   UBER pledged in early 2015 to cooperate more with European cities, which represent key centers of growth. As with Kalanick, UBER wasn’t Camp’s first time behind the wheel: He also founded StumbleUpon–a Web discovery tool part Reddit, part Tumblr–that sold to eBay in 2007 for $75 million.

Garrett Camp

HOW UBER WORKS:

I’m going to indicate how UBER works from the experience we have had on several occasions.  We are sitting in our son’s living room; bags packed and ready to go.  I indicated we might need to call a cab to get to the airport in time for check in.  Don’t worry; UBER will be here in five or ten minutes after I give them a call.  A cab will take thirty to forty minutes at best.  Our son called UBER, indicated the location for pickup, and received a picture of the person picking us up as well as the type and model of the vehicle.  We then had the option of saying yes or no to the driver and his personal car.  He arrived in eleven minutes in a Cadillac Escalade.    The car was clean as a pin and the driver very congenial.  Now for the good part, the cost for transport: $36.81.  This is compared to $60.00 for the ride to the Dallas-Fort Worth Airport.

To download the app, simply go online from your phone or PC, type in the information requested, including a credit or debit card.  The download takes about a minute.  UBER does all charges online.  No money is exchanged including tip.  The tip is factored in with the cost of the ride and is added to the charge.

BARRIERS TO SUCCESS AND OPERATION:

UBER has experienced numerous regulatory and legal challenges to its operations.  Regulators in California; VancouverBritish Columbia; SeattleWashington; and GenevaSwitzerland issued cease and desist orders. The launch of UberPop, known as uberX in the United States, generated opposition internationally. Taxi organizations such as the Madrid Taxi Association in Spain, ANTRAL in Portugal and Taxi Deutschland in Germany obtained injunctions from local courts based on unfair competition claims.  Other injunction requests by taxi companies, taxi drivers, and regulators were denied in the United States, Brazil and France. Officials in DelhiIndia banned all app-based ride services to protect cab driver unions.  In Belgium, the Netherlands, the Philippines, and South Korea, police forces conducted sting operations against UBER drivers who operated vehicles that were not licensed for commercial use.

Several locales, including Portland, Oregon and the state of Virginia that initially banned UBER from operating, later negotiated changes in local regulations that would permit UBER to continue.  In 2015, the company’s efforts to work with local municipalities allowed for an increased rate of expansion. As of January 2015, uberX operated legally in 22 cities and states within the U.S. By then, 17 cities outside of the U.S. had passed specific pro-UBER municipal ordinances.

PRIVACY:

Kalanick received a letter, dated November 19, 2014, from Senator Al Franken, Chairman of the United States Senate Judiciary Subcommittee on Privacy, Technology and the Law, over user privacy. In addition to a list of ten (10) questions, Franken stated that the company had a “troubling disregard for customer privacy” and that he was “especially troubled because there appears to be evidence of practices inconsistent with the policy [UBER spokesperson] Ms. Hourajian articulated” and that “it appears that on prior occasions your company [UBER] has condoned use of customers’ data for questionable purposes”. Franken concluded his letter by asking for a response by December 15, 2014.

Concerns have been raised about internal misuse of the company’s data, in particular the ability of UBER staff to track the movements of its customers, known as “God Mode”. In addition to the aforementioned use of the service to track journalists and politicians, a venture capitalist disclosed in 2011 that UBER staff were using the function recreationally and viewed being tracked by UBER as a positive reflection on the subject’s character. An individual who had interviewed for a job at UBER said that he was given unrestricted access to UBER’S customer tracking function as part of the interview process, and that he retained that access for several hours after the interview ended.

On February 27, 2015, UBER admitted that it had suffered a data breach more than nine months before. Driver names and license plate information on approximately 50,000 drivers were inadvertently disclosed.   UBER discovered this leak in September, 2014 but waited more than five months to notify the people affected. (I might mention here that we never considered our privacy to be compromised.)

SAFETY:

On August 4, 2014, the company announced the scheduled removal of a driver from the service pending a medical review, after the driver suffered an epileptic seizure while driving that resulted in an accident with a pedestrian in San Francisco. The fifty-six (56) year-old driver was hospitalized after hitting three parked cars and then a man on the sidewalk; an UBER spokesperson said in the announcement that the driver “has an outstanding record of service and safety with no prior incidents.”

In December 2014, the New York Times reported on concerns regarding the manner in which the UBER’s app notifies drivers about new requests for pick-up from customers.  When a customer makes a request, drivers are notified on an official UBER mobile app and provided information about where the customer is; in order to accept the request, the driver has approximately fifteen (15) seconds to tap their phone to accept the request. An UBER driver reported that drivers can be temporarily suspended for ignoring these requests.  Deborah Hersman of the National Transportation Safety Board criticized the fifteen (15)-second system, saying that it presents a significant distraction to drivers, as drivers are financially motivated to respond to fares while driving.   In response, UBER has stated that the app “was designed with safety in mind,” and that drivers are not required to physically look at the device to accept a fare.

CONCLUSIONS:

Our experiences with UBER have been very positive and with no issues. I feel it’s a marvelous new technology and one that can benefit the end user.  As with any new service, time will tell as to how viable it will be and if it can survive.  I will say, I hope political pressures and lobbying will not kill the service.  Lining the pockets of our politicians could provide huge barriers to success.  Each individual has one of two options: use the service or use traditional services.  It’s your choice.

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