Uber CEO Travis Kalanick has a plan to make it easier to get a ride. Photo: Jon Snyder/Wired.com
It’s pouring outside, I have an appointment across town in 30 minutes, and my car’s in the shop. To make matters worse, the rain means all the cabs near me are already taken.
Desperate to hitch a ride, I launch the Uber app on my iPhone and tap a button to track my location. In four minutes, a black sedan pulls up to my house, and a driver opens the rear door, welcoming me in.
Fifteen minutes later, I arrive at my destination and step out of the car. I don’t have to hand over the $25 fare or tip, because I’ve already paid through the app. Yes, it was pricey, but it was worth it.
For me, Uber was simple: Request a ride, get in a car and go. But to get the car to my door, Uber’s system first had to crunch through an array of complex mathematical formulas created by its team of computer scientists, all in an attempt to solve a decades-old economics problem plaguing the cab industry: how to optimize driving routes — and provide enough cars — to pick up the most customers in the least amount of time.
“It’s really fun, sexy math,” says Travis Kalanick, Uber’s fearless CEO. He sounds cocky and self-assured, but without giving the impression that he’s trying to sell something. It’s math with real-world benefits, he explains.
“We are not just moving bits,” Kalanick said. “We’re moving people.”
Uber is not a cab business — the app hires luxury sedans — but it offers a compelling alternative to the traditional cab. The cab business is ruthless for everyone, especially the drivers. In order to legally drive a cab, every driver in most American cities must display a “medallion,” a city-issued badge that permits him or her to pick up people on the street when they wave their hands.
For about 80 years, cities’ transportation agencies have enforced the medallion system to regulate the quantity and quality of cabs zooming up and down the streets. The problem is, in most cities, the number of medallions has remained stagnant even as human population and traffic balloon.
Because of the limited number of medallions, the competition among drivers for obtaining a medallion is fierce. Cab drivers camp on waiting lists for nearly 20 years just to grab a badge. Once you’ve got one, the potential payoff is big: Some medallion owners auction off their badges for as much as $600,000 apiece, while others lease their medallions to cab drivers for $100 to $200 per shift.
And because a city’s cab supply is scarce, the competition for hailing a cab on the street is likewise intense, especially on a night like New Year’s Eve, or the minute the bars shout, “Last call!”
With technology, Uber offers an app-powered car service that helps drivers earn money outside the medallion system, which amounts to more vehicles to fill more people.
A startup based in downtown San Francisco, Uber launched in June 2010. The startup has partnered with dozens of sedan services to hire their drivers and hook them up with iPhones containing the Uber drivers’ app. Uber customers can hire drivers using the Uber app available on both iPhone and Android, or anybody with a cellphone can hail an Uber car by sending a text message containing the pick-up address to Uber’s number. Once riders make a request, they receive an ETA from the driver.
When a driver receives a request, it appears on his iPhone, along with GPS coordinates of the rider. From here on, riders can call the driver if they need to make any special requests. Customers are required to enter their credit card information through the Uber app or website prior to requesting a car, so when they step out, there’s no need to yank out their wallets. Riders can rate their drivers with a rating of 1 to 5, so if someone reports a negative experience, Uber can discipline (or fire) delinquent drivers.
Uber so far is only deployed in San Francisco, but over 10,000 customers have registered for the service already. The service will become available in New York “very soon,” according to Kalanick.
There’s no charge for the app, but customers pay a premium each time they book an Uber car — about 40 percent more than a regular cab fare.
To justify the premium, Uber guarantees that anybody who asks for a ride will get a car in a timely manner no matter what. Morevoer, Kalanick promises, the entire experience will be “über.”
“We want a more über experience,” Kalanick said. “Giving somebody you don’t know your credit card is not uber.”
The trick is, it’s not easy being “über.” It takes some really complicated math.
