David vs. Goliath: Via vs. Uber
New York City had an exciting ridesharing entrant in 2015. Via branded itself as on-demand transit on a mass scale. The idea was simple: Ride weekdays, 6am to midnight, and Saturdays, 10am to midnight, anywhere in Manhattan south of 110th St for around $5. That’s it.
It took all variability out of ridesharing. They didn’t care about the distance. It was a perfect supplement to far east/west avenues of Manhattan which aren’t serviced by subways.
Via also understood branding. They operated in black luxury SUVs — a refreshing change from the omnipresent Prius of Uber and Lyft.
Via also understood consumer psychology in regards to sunk costs. A rider guarantees their fare only if they purchase a PrePaid ride credit valued at 5 rides. This is beneficial to the company when they are looking at cash flows.
They don’t get money only when a person rides, but much earlier on.
Uber has had their UberPool product in NYC since late 2014. The offering was, from most parts of NYC, we slash your lower fare (up to 55%), if you don’t mind picking up a passenger along the way that is going to the same location.
The tradeoff has always been the same: money for convenience.
If you were to think of transportation on a spectrum where on the left side we have fastest/expensive/freest to the right where we have slowest/cheapest/most bound it would be:
- Private Jet — takes you anywhere you want to go, really quickly = ~$5,000.
- Regular Uber — from Uptown Manhattan to Downtown in your own car, taking any route you choose =~$26.
- Uber Pool — from Uptown Manhattan to Downtown in a shared car = $21.
- Uber Commute/Via — from Uptown Manhattan to Downtown in a shared car (during certain hours and certain block ranges, which include rush hour) = ~$5.
Both companies are trying to displace local mass transit options. To do this, they have to reach scale to bring the price down to a level which current subway riders can see these companies as viable alternatives. Via currently is open up to employee commuter benefits and accepts:
- WageWorks Commuter Card
- TransitChek Visa Card
- Beniversal Master Card
- eTRAC Master Card
- Commuter Check Prepaid Master Card
- Benefit Strategies Visa Card
- TRANServe Debit Card
- MyAmeriflex Master Card
- Zenefits Card
The road for Via is going to be tough. Uber does have a ton of installs and don’t need to pay additional acquisition costs when rolling out a new feature — they just launch it in the app. I highly doubt that Via is going to “upstream” and provide “boundless” on demand rides. I think they will continue to focus on refining their algorithm to serve the local commuter market. Possible they would expand their range to outer boroughs as well as other cities — but focus on the commute.
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