Calling All Cabs

Article excerpt

Byline: Daniel Gross

Uber and the new road rage.

It's hard to think of a market more mired in the mid-20th century than urban taxis and car services. In a world of digital markets, buyers and sellers of the service interact in the most analog way imaginable. Drivers cruise the streets, advertising their availability, and buyers stand and try to hail them, competing against the elements and one another. It seems to be a classic case where a simple app could make could make the whole thing run more efficiently.

Enter Uber. You download the app, punch in your coordinates, and wait for a driver from a car or taxi service to arrive. The user pays Uber a fixed fee, plus time and mileage, and Uber pays the driver. "We look at ourselves as a technology company," said Travis Kalanick, the mastermind behind Uber, which has 140 employees and is based (natch!) in San Francisco. "We don't employ cars. We don't employ drivers. We help consumers connect with the legal, regulated transportation providers in their city."

Social companies like Uber--think of Airbnb, or eBay, or Craigslist--have been able to gain scale and customers very quickly because the barriers to entry are few. They never really asked for permission. And so Uber, whose business is rising at a 26 percent monthly rate and is now in 18 cities, generally took a sidewise approach to regulators. It would consult a lawyer to make sure the service was legal, sign up drivers, and get going. …