Uber why can a taxi succeed

Liu Yan
Headline Uber limousine taxi
With subsidies to attract more drivers, increased intensity and efficiency may be the reason why Uber's latest price cut is 30%. A Uber new driver told me that after the drip and quick end of the car subsidy, Uber lowered prices will be subsidized to the driver, and also eliminates the previous need to pay 20% platform fees; In the two weeks of joining Uber, he earned 7000 yuan, each day early in the evening each pulled to 100 yuan, he will be off.
Uber taxi

Titanium Media Note: In late March, Uber again adjusted prices, announced the price drop 30%. After the price of a week, after the party with friends, the reporter called a Uber home, home after playing 50 percent, showing the price of 6 yuan, usually a taxi to the journey is about 25 yuan. Close friends, almost in this car war left Uber app people will say, this software is cheaper than taxis.

This is in the taxi market fierce fighting, put aside those free vouchers, Uber has "people better step" (Uber in the lowest price) to the lowest price. Why does it do the least of the same kind of software, and how does this pricing idea solve the driver's income reduction? The article, published in the April issue of the journal business Value, does not discuss the best way to lower prices, only to uncover the idea and thinking behind pricing:

The success rate of the call was greatly improved.

The whole thing Uber do is improve efficiency. The so-called high efficiency, is that you meet a car, the nearest driver in the shortest possible time to receive you, and after you get off the car, the phone will ring away from the most recent one. In this process, the efficiency can be decomposed into a "waste of time less + empty rate low."

Compared with the original intensive taxi industry, because of the number of passengers and drivers, taxis are inherently more efficient than the car. Therefore, the first step of efficiency is to have enough cars and passengers, the taxi market set off subsidy war is to attract both ends of the guests.

First look at the tactical level of Uber execution.

First a car or a passenger first, this is a "chicken egg, egg chicken" problem. Driver side, Uber's approach is no different from the ordinary car market, to the major leasing companies to seek cooperation vehicles; Ben is Uber Beijing general manager, he is a growing American Chinese, has invested in the return to join the Uber, he first called on his friends to join the returnees, at the same time to the bar to send leaflets. But he found that a two-dimensional code was placed on a flyer and then scanned for a car, which did not have a high conversion rate. He started asking students to send emails to students at major business schools. Business School people have a strong sense of acceptance of new ideas and have a certain understanding of Uber, and the number of downloads and active users is coming up quickly.

Prior to this, the price of Uber is also very high, as the base of vehicles and passengers gradually become larger, more dense, and the price of the homeopathic decline.

In fact, Uber is not cheap at first. At the beginning of entering Beijing, only the international trade, three Li Tun such places can be called to the car, and the price is high. Even after the price reduction, can be called to the car's success rate is low or too long to wait for the car too far, give up a lot of people.

Recently found that the success rate of the car was greatly improved. A Uber new driver told me that after the drip and quick end of the car subsidy, Uber lowered prices will be subsidized to the driver, and also eliminates the previous need to pay 20% platform fees; In the two weeks of joining Uber, he earned 7000 yuan, each day early in the evening each pulled to 100 yuan, he will be off. I also encountered a one-month-old job, earning only four thousand or five thousand yuan of drivers.

With subsidies to attract more drivers, increased intensity and efficiency may be the reason why Uber's latest price cut is 30%.

This is almost all the car companies will try the method and tactics, but these are not Uber impress me. In the pursuit of the concept of efficiency, Uber has three things that impressed me very deeply.

No appointment

The first thing is not to set an appointment.

Booking a car is actually a way to make it less efficient. If you make an appointment with the driver to send you to the airport at 11, then the driver must start from 10 o'clock to consider whether he can catch the list of 11 o'clock on time to your home. If you run a little more than a 9-point trip to the West, you don't have to go to the east, and you just sail east to the door. Therefore, the appointment may sacrifice the driver's time, the promotion empty rate.

How to solve the reservation requirement? Uber's idea is that you can call a car in 5 minutes at any time you need to use the car. For example, London, Los Angeles, San Francisco every time the vehicle can be controlled in 3 minutes to arrive, Beijing's average arrival time control to 5 minutes, any need to use the car can be in 5 minutes to the car, which eliminates the distress of appointment.

Adjust prices in real time

The second thing is to adjust prices in real time according to supply and demand.

Drivers and passengers are always a game of the process, in the Uber announced the price of the day, the car page shows the vehicle tension, the price rose 1.3 times times; the next day has risen to 1.8 times times. Ben introduces:

"Every week we have each trip every driver to make money, the driver 10 minutes to make 10 dollars, suddenly up to 15, 20, 25, our efficiency will be doubled several times, that time can reduce prices." ”

This is a very interesting cycle. Because there will be more passengers to use after the price reduction, the driver will receive more and more orders. If Uber infiltration like a pyramid, the lower the price of the use of more people, the pyramid below the user base will be more and more. The price difference with taxis is such a delicate tipping point that the snowball effect will work.

Compared to the taxi platform, Uber less the money that the taxi driver needs to turn over, and this part of the money can be given to the passengers. However, when prices fall to a certain stage, to retain the driver group, the driver will need not less than the income of taxis; of course, if the driver sees the price drop, also will be able to spend more time to make the same money, very likely to lose, the car less people more supply and demand tension causes the price

The control of the balance point of price reduction is extremely delicate. The importance of the passenger or the driver is the power of a continuing imbalance in business. Either end of the force will collapse, do not take action will die. Uber dynamic algorithm is constantly adjusting to rise and fall in order to seek a continuous uneven horizontal state. Like the waves, when you see a curve falling, another higher wave comes over, which is the driving force of constant imbalance.

A dispatch, not a robbery mechanism.

The third thing is that Uber adopted a dispatch rather than a robbery mechanism.

A grab list is often used to get the driver to rob a distance from the passenger, so the driver will be in a tense mood all the time. And the dispatch is still adhering to the principle of efficiency first, is always the nearest driver to pick you up.

In the "Rob the single" mechanism, the system will tell you close to a group of drivers where there are passengers, the driver to determine according to the location of the passengers decide whether to take orders, passengers according to their preferences to choose their own models. In this way, both the driver and the passenger have made their own "best choice". In the "dispatch" process, the algorithm will make the best choice from the overall, to pick the passengers and drivers are always no taste of the best choice.

However, local optimality may not be optimal globally.

Traditional economics believes that people are rational, therefore in any case will make "maximum egoism" of the choice, which occurs in the case of asymmetric information; In Uber this information is completely symmetrical in the taxi environment, the central brain can see each car, each person's supply and demand status, so as to optimize efficiency.

Kelly has put forward the Internet "to the central" trend of development, he had in the book "Out of Control" described the state of the colony, that is, giving each colony a certain degree of autonomy, so that they work together, with this "idiot election idiot" method, and finally still can produce amazing results, Scattered bee groups can elect queens and act like a whole. The idea of "going to the center" puts forward the distributed management, that is, there is a bee's guide, but within the range of small colonies, they have a certain degree of autonomy. This coincides with the dispatch.

The prerequisite for this matter is based on asymmetric information. You'll find out whether it's a "dispatch" or a "grab", and things are changing in a market where information is completely symmetrical. In a market where information is completely symmetrical, such a central brain reduces the computational hierarchy and assigns optimal allocations to achieve optimal efficiency.

Once with easy to founder Zhou Ai chat, he said one of my impressive words: "You think the driver's first demand is to make money?" The first thing a driver wants is to get respect. He chose a more humane way to make the driver feel the sense of being. And Uber more like a science student's interest thinking, let machine and algorithm in accordance with the principle of maximizing efficiency to adjust the market.

The central thinking of "rob a single" can also be optimized to the subsidy war. The central brain knows where there are a lot of cars and no passengers, and where there are passengers without a car, it requires the center to steer the extra vehicles to the crowded areas of the passengers. But if drivers drive to crowded places, they pay extra fuel and time, and the system can guide drivers to the most crowded places with minimal subsidy. In this way, the optimal cost of platform, driver and passenger is the lowest.

If we rise to the social formation, in a sufficiently transparent and information-symmetric environment, there will be no cover-up in the 670 's mass production movement, a bold assumption that planning and Central Command may be more efficient.

Almost all the car platforms are claiming to be more efficient in lowering prices. The low price is only because the Uber algorithm is efficient, or other reasons.
When I saw a Chinese taxi boss in the media interview said the words: "Those price sensitive body is not our target users, their driving force is cheap." ”

This time I suddenly enlightened. The reason why Uber price down is a kind of idea problem, some people's idea is high quality service, some people's idea is efficiency and reduce price. The company's philosophy is to use a shared economy to improve efficiency, efficiency will inevitably lead to a price drop, so that the share of the trend of thought can be true to the real experience of the convenience, like the rapid diffuse storm.

One of the details that can be corroborated is that on the uber.com page, you'll find that the Uber sort is "Uber X-taxi-black-suv-lux", priced below the taxi's Uber X, which has been planned for a long time.

Therefore, the price of Uber, is a means, fundamentally or idea.

When Innovation encounters regulatory

Often, prices are a key element of government regulation. Car companies do not lower prices early, in addition to supply and demand, efficiency, philosophy, and the communication with the authority of the "insistence and compromise" may also be inseparable. Therefore, there is a need for government and regulatory capacity.

More than China, Uber is encountering taxi drivers and policy resistance across the globe, opposing the wave of waves. Uber more worthy of learning is subversive innovation under the courage to gamble.

Listen to the voice of Uber founder Travis Kalanick. 2010, 4 months after the Uber line, Karanik received the San Francisco government issued the order to stop business documents. At that moment he knew that the idea had succeeded. Subsequently, Karanik did not respond to official documents, but called on netizens to sign petitions, and send letters to the mayor mailbox feedback.

According to media reports, the number of taxi drivers has plummeted by two-thirds in two years after Los Angeles Uber. Uber's actions against the government have also been more radical: in areas threatened by the government and the police, Uber would like to write to the local politicians to support Uber development, and to hire lobbyists such as David Plouffeuber, a former Obama campaign advisor.

Of course, this radical strategy is also part of the effect, after Uber lobbied Virginia State Governor assistant, the car authority in the 48 minor issues of the embargo issued instructions, no ban on Uber business.

A more interesting curve is that every time Uber is hit by a taxi strike or policy drag in major cities, it tends to be the fastest pace of download. Perhaps the big strike gave Uber the best publicity-a cheaper, better service and more convenient software.

The greater the outcry, the Uber's valuation soared. Valuations have soared to $40 billion after Uber a new round of $1 billion trillion in funding.

Uber in the wave of waves of opposition and not shrink, instead of taking active lobbying policy. The Washington Post report says Uber has set up a lobbying team of at least 161 people to persuade state law makers and employ a large number of senior political advisers to snipe at political costs of traditional taxi companies. Uber is said to have spent 475,000 of billions of dollars lobbying the law-makers only in Sacramento, California.

It is very common for Silicon Valley companies to hire political lobbies, which spend 14 million of dollars a year lobbying the U.S. government.

See here must be some people say, it is in the United States imperialism, let Uber to China to try. A few days ago, the Ministry of Communications "never allow private cars to operate". Prior to this, the Ministry of Transport has also issued a number of encouraging carpool to solve the traffic problems related documents.

Uber has adopted a relatively moderate approach in China. Uber platform of the car is divided into two categories, one is Uber X-uber black relatively high-end car, and leasing companies directly signed contracts, such vehicles are not counted in the private car category.

Another category is the localization of the "People Better step" series, to create a "carpool" concept, to encourage all drivers, in commuting time can carpool to send fellow travellers, by the way to make money, can also ease congestion to solve traffic problems.

Uber China specifically with the headquarters stressed that the people are better step is a carpool platform, so to cancel 20% of the platform fees. This has also uber a big discussion at the US headquarters, because the idea is different, the technical and algorithmic frameworks needed are not the same, and some gains need to be sacrificed. Another detail is that the drivers of this platform do not have the minimum monthly request to receive orders, after registration, as long as idle time Open the app.

Today, people better step in a taxi experience and ordinary call car no different. Imagine that once you have developed 2 orders or 3 order carpool, prices can continue to fall.

You will find that the most common means of Uber in capitalist countries is to call on users to write, petition, and even the mayor of Ottawa on Election Day, all the people who go to the polls can travel free by Uber, in the country is to choose the direction of government encouragement into the clever introduction. All breakthrough innovation will break the balance of interest. When you break the rules and say no, do you have the courage and wisdom to stick to it.

For the Government, it is necessary to take care of the public mood and to stabilize the taxi drivers group, both to ensure passenger safety and to solve traffic problems. The game is far from over, after all, the limited operating vehicles in Beijing need to address the more demanding day-to-day travel problems.

Of course, "insecurity" remains a weapon in the global marketplace and the government accuses Uber. For example, in Paris, India and other cities, there are explosions Uber drivers raped female passengers, the allegations of insecurity. Coincidentally, Uber is working with the United Nations to encourage female drivers to Uber women to work independently, on the grounds that Uber has passenger information that can make drivers safer.

As a result, emerging companies such as Uber need to be more reasonably regulated, rather than blindly banning the so-called "never". For example, when the private car has in fact into the taxi market, the major platforms can be wiped out the car, whether to take timely measures to fingerprint collections, identity certification, or filing system, in order to reduce the probability of crime. This requires both industry self-discipline and rapid expansion of the industry to loosen standards when governments intervene. Once that happens, the government defaults on the legitimacy of such instruments.

In the longer run, this is an unavoidable trend. Tesla is developing driverless cars, and the entire driver community may no longer exist. Once the unmanned technology is popularized, the future can let my car send me to the company, directly to "Uber" field to pull a single income. At this time, whether the government should be more concerned about how to set up a reasonable tax system. (This article will be published in the BT media ▪ "business value" magazine April issue, the network exclusive first titanium media; reporter Liu Jinjun)

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(This article is the author @ Liu Yan June authorized Titanium Media published, and by the Titanium Media Editor, reproduced please specify the source and this article link)