What should Uber do in Paris?
The legal 15-minutes delay before private driver pickup might actually be a good thing for Uber.
Believe it or not, in some ways the imposed 15-minutes delay could offer a huge opportunity to Uber in Paris. This could give Uber the opportunity to out-compete other services thanks to its roots as a technology company.
Expected pickup time is a big criteria when deciding whether to request a car (you’re more likely to order a car if it can be there in 2 minutes rather that in 20), so a slump in demand is to be expected when the new regulations get into effect. Based on this, two scenarios could play on after January 1, 2014:
First scenario: lax application of the law
Companies such as Snapcar have already stated their intention to have their drivers ignore the law:
This is the case of SnapCar, one of the market leaders, whose cars “will continue to arrive at the location of booking as soon as possible.” “We will not ask our drivers to slow down deliberately and artificially” argues Snapcar’s boss, in a letter sent to its users. “We will take responsibility for any financial consequences,” warned Yves Weisselberger.
One of the big uncertainties with this scenario is the reaction of drivers. While some companies operate their own fleet of cars (such as Les Voitures Jaunes or LeCab) and might be able to cover the incurred costs for their employees, many others (such as SnapCar, Chauffeur Privé and Uber) are only intermediaries between users and drivers. They are less likely to be able to convince drivers to break the law, or to provide cover for the potential legal fees incurred by drivers.
In any case, if the law is not strictly enforced, the current market conditions won’t change much and Uber will retain its existing advantages (notably global scale and access to capital) against competitors. All the company will have to do is to keep trying to out-execute the competition.
Second scenario: the government plays it tough
The second and more likely scenario is that the government will eventually try and implement control mechanisms in order to make sure that private driver services respect the 15-minutes delay when sending cars to clients. Even if they don’t do it willingly nor effectively at first, the taxi lobby will be on their necks until they do.
In this scenario, private driver services will be facing the perspective of a dwindling demand, being left to fight harshly for the remaining pool of clients. In order to attract those clients, the services that have to make money out of their own fleet of vehicles might be tempted to lwer prices in order to entice clients. The artificial constraint on demand generated by the new law might trigger an all-out war between services. They could also choose to exit the market altogether.
Assuming enforcement of the law, personal driver services will end up having to optimize the way they manage advance bookings in order to respect the law. Yet right now, Uber does not offer advance bookings in Paris. Why is that?
Advance bookings are difficult to manage
In the taxi world, it’s notoriously difficult to get a reliable advance booking done. Oftentimes, drivers that you though you had booked in advance simply don’t show up or get on location late. The night of my wedding, a friend had booked 3 cabs to come pick him up at 4am. 2 never materialized while the third showed up more that 1 hour late.
There are two big issues with advance bookings: planning and trust, the second stemming from the first. It is easy for a cab to decide whether or not to pick you up now: they’re either available or doing a ride. The problem is harder when you’ve asked to be picked up 45 minutes from now at a specific location. Should the driver say yes and forgo other potential opportunities in the meanwhile, or accept and run the risk of doing a low-paying ride later on? The opportunity cost for a driver accepting an advance booking is high.
This problem is compounded by the fact that some drivers accept advance bookings but then proceed to also accept incoming rides which result in their inability to honour the booking. This creates a mistrust in clients, who search for other alternatives even when they’ve booked a cab and sometimes leave before their cab has gotten to the agreed upon pickup location.
A service such as Uber has all the information needed to alleviate both issues. First and foremost, they have access to the identities, reputation and payment information of both parties. In addition to this, they manage a large fleet of cars. Assuming sufficient overall supply, Uber should therefore be able to select the best car in advance of the agreed time and dispatch it on site. If either the selected car or the user doesn’t show up, Uber can use their reputation mechanisms, combined with a fee for the cancelled ride.
In other words, Uber has the opportunity to do with advance bookings the same thing it did with immediate car requests: amaze customers with a service that will be much, much better than what exists today.
Integration with other services
In order to fully achieve the vision outlined above, Uber could do much more than only adding bookings in its app. It could go on to open-up its service to third-parties for programmatic access.
Personal assistants are a hot category right now, with services such as Don.na and Google Now providing their users with useful location-and-time-aware information: “Leave now in order to get to your meeting on time”. This type of use case could easily be extended to “I booked a black car for you so that you can get to the airport on time”. Personal assistants have access to a wide variety of data, including an user’s calendar and address.
Personal assistants are not the only type of service Uber could associate themselves with. In many of the city where it launched, Uber worked hard to associate itself with events and venues. “You’re at this cool party, why not get an Uber ride home?”. Going further in this direction, Uber could integrate with services such as Foursquare to offer advance bookings. “We noticed that you just got to the stadium, do you want a ride home when the game is over?”.
With the advent of the iPhone 5s’ motion co-processor, this type of use case could become much easier to implement. Let’s see how it could work: an user arrives at a game and checks-in with Foursquare. Foursquare notifies a personal assistant service. The PA service accesses the user’s calendar and looks at the event’s end time. The PA sends a notification to Uber (“User X is at location XY, estimated end time is 6:00pm.”). Uber sends a notification to the user to offer an advance booking for that location at the event’s end time (or just does the booking in the background). Alternatively, Uber could add a virtual fence around the user’s current location and pop up a notification suggesting that they book a car when the user passes the virtual fence. Creepy? Maybe, but also very useful.
Tech company vs car company
This type of use case is exactly where Uber’s advantage shines. At its core, Uber is a technology company. Uber is competing with services that see themselves first and foremost as transportation providers. Even the most technologically advanced actors in that market don’t see much further than making their logistics systems more efficient. On the other end of the spectrum, Uber is all about convenience.
Uber’s goal should be to become the underlying service that somehow magically knows when you need to go from one place to another, and delivers the best vector to get you there in a timely manner. By becoming able to predict where and when people will need a car, Uber could achieve the vision of fully embedding itself in the daily life of its users. This is in line with its “cross of logistics and lifestyle” positioning.
Of course, there are significant challenges to overcome before achieving such a far-reaching vision, notably from a technological and privacy standpoint. What if the user forgot he ordered a car? What if a PA service starts sending requests on behalf of the user that end up costing them real money while the user didn’t expect it? Many things could go wrong, but the value to unlock is commensurate.
Increasing supply is a more urgent challenge
Whether or not this long-term vision actually makes sense for Uber to pursue, their dev team probably has a lot of more pressing issues on their plate. As outlined in this candid Facebook post by Travis Kalanick, Uber’s founder, the company still faces significant challenges when it comes to fulfilling its core promise:
Noah, I hope we can resurrect some of that Uber love. We’re innovating, not-sleeping, racking our brains every day to continue to make the service better. We actually appreciate you holding our feet to the fire, and I expect that we’ll be up to the challenge.
Uber still has to invest significant time and money in solving its key promise: getting cars to people upon request, as fast as possible. Since demand for the “basic” service is still growing fast (from Travis’ post, monthly growth in SF is still in the double digits), it will be tough for Uber’s technology team to tackle a large new feature. The vision I outlined requires several large technology blocks to come together, which would require significant time and effort to implement.
Yet if Uber is to succeed in markets where regulation imposes a time lag between car request and actual pickup, it will probably have to move towards advance bookings head-on. Unsurprisingly, this also happens to be an oft-requested feature.
