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Uber and Lyft vs the Cab Industry

You know the scene: a person standing in the rain in some major city, waving frantically at all the passing yellow sedans in hopes of some salvation, but are rewarded with only dirty street-water-soaked clothes for the effort.

This is not only a cliched scene in every romcom you’ve ever seen, but a very real occurrence for people who depend on cabs for transportation. This poor representation of customer service is happening less and less thanks to Uber and Lyft.

Cab Companies as Goliath

The idea of a driver for hire dates back to 1605 when horse drawn carriages services began to operate in Paris and London. The modern-day taxicab—gas powered—didn’t make its way to America until the early 1900s.

Taxicabs increased as a popular mode of transportation in the 20th century, soon crowding the streets of New York, Los Angeles, Chicago and other major metropolitan areas. The industry did innovate to make the experience simpler on riders with the introduction of taximeters and two-way radios so cab drivers had direct contact with dispatch centers. In recent years, the only major innovations the cab industry has seen was the implementation of credit card readers. Some local cab companies are working on their own innovations—such as apps—but as these changes are not industry-wide, they do little to truly change the taxicab experience.

Uber as David

Like all successful products and companies, Uber arose from a need that was not being met. In this case, it was the need for reliable, accessible rides in San Francisco. The idea of founders Garrett Camp and Travis Kalanick first involved a larger-than-life idea to develop a limousine timeshare service; but as all ideas that are dreamed up over a few drinks, the plan became much more realistic—and practical—in the light of day.

Uber began as three cars in New York and is now in 39 countries across the globe. It all starts with an app users download to their phones. Accessing the phone’s GPS, Uber connects you with the nearest available driver. Once a ride is requested, the app finds you a driver and lets you know where they are via the map. A text arrives when they are there to pick users up and car and contact details are clearly displayed, should a call or text be necessary. Users pay directly through the app and can easily get pricing for their city and fare quotes for a specific trip. If a group is taking a ride through Uber, they can be invited to split the fare in the app and each person is charged equally, getting rid of IOUs.

Uber takes out the operator that many reach when calling a taxicab, eliminates the wait for a cab to be confirmed and takes out any approximations as to when your ride will arrive.

How Uber is Conquering

Uber was conceived five years ago and, according to recent articles, may have the cab industry in some cities closed in less than two years.

Though Uber was off to a slow start and banned in some cities due to charges it is an illegal taxicab operation due to drivers lacking proper city licensing, it continues to grow and just launched in cities in Texas and North Carolina in late June. The demand from customers is there and Uber has quickly adapted to meet their needs and traditional taxicab companies are taking notice. Some cab companies in specific cities have developed their own apps—such as the Hail a Cab app in Houston, San Antonio, Austin, and Galveston from Yellow Cab—but it may prove to be too little, too late.

Customers are finding it is easier to ‘order’ a ride and Uber provides benefits such as riders not even needing to know the address of their current location thanks to the use of GPS. Uber also helps riders avoid surcharges that may come with a cab company. All drivers are screened and background checks are run. They have even expanded their offerings from the initial test-run in New York, as they offer the opportunity for riders to order a ride from a private driver, SUV and even luxury car.

In addition, Uber shows the problem with the taxicab industry as a flawed service. Bradley Voytek of Uber says it best on

“Can you imagine if, when you were hungry, you had to stand around trying to get a wandering food vendor’s attention so that you could get a bite to eat? Why do we queue up in orderly lines waiting to buy our food or coffee, but when it comes to hailing a cab it’s an every-person-for-themselves, take-no prisoners affair?

Can you imagine if, when any given passing food vendor didn’t like the way you looked, or the color of your skin, or the type of food you wanted to order, they would just walk away without completing your transaction? And that, if it was raining, or the wrong time of day, or if you were in the wrong neighborhood, you might just never get to eat?

And sure, you could call to try and get something delivered to you, but as often as not the vendor just never shows up with your food; there’s no information trail and no recourse for you to take to ensure that your business transaction is carried through.

Screw. That.

That is not how the service industry should work.”

Opportunity to Learn

What can we learn from this particular victory of David over Goliath?

Much like we saw in the battle between Netflix and Blockbuster, innovation and setting a new standard in your industry is what will truly get you ahead. For so long, customers just accepted the shortcomings of the taxicab industry—inability to take credit cards, long hold-times with dispatch and even cabs that failed to pick them up—because that was ‘normal’ in the cab industry. You could walk into a bar, a meeting, an airport, etc. and share the story of the horrible taxicab experience you just had and you wouldn’t even need to tell the whole story because 90 percent of the people listening already knew the ending. They had experienced the uncomfortable or smelly car. They, too, had not had enough cash on hand and needed to end the ride short. They knew what horrible song you had to listen to while on hold with dispatch—they’ve heard it too many times.

Customers are always going to gravitate to what makes their lives easier. The rise of Uber and eventual fall of taxicabs—currently underway—shows the importance of adapting to customer needs and truly providing good service. For the longest time, taxicabs have been the main option customers had. With the development and rise of Uber (and similar companies such as Lyft and others) the customer has choices besides the traditional cab company, and they are choosing the service that meets their needs best.


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