Typical drive in Los Angeles, any time after 7am. Image from The Wall Street Journal.

Death of Traffic — Uber’s Path to Transit Dominance

For a long time, I’ve resisted using ride-sharing services like Uber and Lyft when I was living in LA. Before Uber X/Pool and intense price competition in the industry, these companies were glorified taxi services in the early 2010's, costing $30+ each way between the Westside to Downtown.

Things changed after I moved to San Francisco — a city that’s evidently allergic to transit.

  • Downtown parking lots costing at least $15 for short durations, unless you venture into the tenderloin for the $5 spots
  • Buses/trains that are compelled to stop at every single block — WHY!
  • Competitive street parking with lots of metered, permit, and street cleaning rules
  • Stop. Signs. Everywhere.

In LA, I was at least covering some distance in my car. In SF, I settled into my quadrant of the city — too paralyzed about finding parking, and too bitter about the MUNI system that NorCal folks often raved about.

Uber + Parallel Processing = Engineer’s Dream

If San Francisco were a computer, Uber and Lyft are akin to multi-core systems that enable more parallel tasks to run. Conversely, existing trains and buses are serialized systems that are antiquated and prone to single-point failures. With Uber and Lyft, one single bus carrying 50 passengers became 50 cars getting the job done.

Moving to San Francisco? Consider getting a bike for faster ETA’s.

As overall pricing becomes more competitive with Pool/Line, these ride-sharing services are taking over as the de-facto solution to SF’s lagging public transit system and expensive car ownership. While I’ve gotten by on my trusty ’86 Trek for a years — beating the ETA for cars and getting in shape at the same time — lowered prices (yes I’m cheap) and a bad back’s converted me to using Pool more frequently. Case in point: I’ve taken over 70% of my lifetime rides on Uber in 2017.

After 3 years of Uber, I’ve racked up 70%+ of my rides this year because of price changes and life events.

Uber’s been a lifesaver in getting me between work and doctor’s appointments, edging out public transit from a cost and convenience perspective ($2.99 per UberPool pass ride vs. $2.75 per MUNI ride). Over time, we’ve seen more fixed-rate options that’s put more pressure on public transportation. While such shift has introduced interesting partnerships between Uber and public transit as municipal government find it too expensive to run public services, whether the privatization is net positive for society as a whole — that’s for another debate.

Path to transit dominance: automate everything

The truth of the reality is that our cities don’t have infinite capacity to accommodate the additional vehicles on the road. Most San Franciscans will tell you that traffic’s gotten worse over the last few years, and it’s true: Uber/Lyft is contributing to 20% + of San Francisco’s traffic, making traffic in the city the fourth worst in the world.

While Mayor Ed Lee is talking to these companies about pilot programs to reduce traffic, I doubt such talks will reduce the number of cars within the city. Here’s an alternate win-win solution that’ll solve consumer transit woes and get Uber/Lyft deeper into the B2B game: automate everything.

Self driving is already here — but who will win the war? Photo from Uber Newsroom.

Stage 1 — self driving cars: while we’ve seen the proof of concept and we’ve read the news, the truth is that car manufacturers are not good at software development. There’s a reason why Apple CarPlay and Android Auto are taking over the car OS, with 60+ car companies in their portfolio — car manufacturers do not want to build software. Enter Uber and Lyft, who are primed and ready to be the plug+play autonomous vehicle partner with car manufacturers. The reasons why Uber/Lyft have an advantage over other players in the space is twofold: 1) access to consumers who are already relying on them for transportation needs, and 2) lower barrier to adoption in the consumer space, given consumers can utilize the service without having to purchase the vehicles.

With more than a handful of companies working on this problem, the industry will likely see more consolidation as it matures given the mostly undifferentiated product. Use case: I need the car to 1) get me from point A to B, 2) doing it safely and legally, and 3) don’t make me throw up. For meaningful competition to exist in the industry, companies will have to create more a differentiated product. So far it’s been too early to tell. That said, the winner of this market has a solid case of winning freight and logistics as well.

Stage 2 — active traffic management: this exists in some shape or form, but has limited upside today because people drive unpredictably. In a world where all vehicles are self-driving and conform to some standardization, we can 1) control traffic flow to accommodate higher trafficked areas, and 2) coordinate all self-driving cars to move at predictable manners to maximize efficiency. Rip out the stop signs and open up the roads! The term “traffic” will forever be a relic that our children will never understand — like cassettes and floppy disks.

Uber/Lyft’s strength is in optimizing routes for algorithmic problems, and traffic management’s an industry for them to own if they’re designing the self-driving cars and setting standards. Also doesn’t hurt to have some of tech’s most powerful lobbyist and lawyers to work with municipal government.

If you think all of this is reminiscent of Minority Report, you’re right. What seemed like a pipe dream in 2002 is could happen in our lifetime. While there are tons of nuances to solve (pedestrians, hackers) and policy repercussion (job loss, infrastructural costs), what’s interesting is that there are companies emerging that could own both the front-end and back-end of the transportation problem. Owning the value chain in transportation has huge impacts on the physical world — in our safety, the ways we move, and how cities are run.

Uber/Lyft’s rise to Silicon Valley stardom relied on working with the individual, and shifting its focus to solve self-driving and traffic management is a change in philosophy by collaborating with car companies and government agencies. While a Minority Report future is still decades out, I can dream of a world where I’m no longer F-bombing my way through the jammed streets of San Francisco.

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