A “disruptive” technology is one that dramatically changes the status quo, especially upsetting standard economic assumptions. In many cases, a disruptive technology takes years to make an impact. One example would be smartphones. Ericson introduced the original smartphone in 1997 yet it was only in 2013, 16 years later, that the sales of smartphones overtook traditional mobile phones. Other times, however, the disruption occurs much faster.
Enter Uber. If you haven’t heard of it, Uber is a transportation service that is revolutionizing the way people use for-hire transportation services in many urban areas, including many in California. In less than three years, it’s grown from its home base in San Francisco to over 60 cities in 22 countries. The reason for this explosive growth? People love the concept and it is gaining a huge following.
What Uber does is blend the convenience of a taxicab with the higher level of expectations that come with using a car service. Uber users download an app to their smartphones, register their credit card information with the service and then can immediately summon a car when and where they need it. Uber also blends in the benefits of a social media review site becauase it allows the riders to rate the drivers so when more than one car respond to your request for transportation, you can pick the best rated if you want. That means that the drivers who participate in Uber’s network have to be on their best behavior when they have passengers and maintain clean, inviting vehicles to get good reviews. And what makes Uber extra cool to use is that when your ride is over, you just step out of your car and the fare plus tip is automatically charged to your credit card. No fuss, no muss, no bother!
How many times have you called up a cab only to find yourself watching an uninviting, dirty yellow car pull up with a rude driver who refuses to turn on the air conditioner or turn down the music? Uber eliminates that. And you know it’s a disruptive technology because the industry most at risk of losing business – cab companies – are fighting tooth and nail to prevent them from expanding to their turf. Many cities have fought Uber operations by citing them as unregistered cab services but the massive outpouring of support from users have quashed most of those attempts to shut it down.
Uber is such a simple concept. Most users think of it as an app, but think about the logistical problems the company solved. No person stands between the rider and the driver. All transactions happen cleanly and without haggling for price or tip. Riders can decide which drivers to use based on their ratings and can reward or penalize their own drivers if they want. Drivers get paid virtually instantaneously as their accounts are credited as soon as the credit card transaction takes place.
I had the chance to use the service in San Francisco recently and was amazed by the speed and simplicity of the whole thing. San Francisco, like many cities in the U.S., has allowed Uber to operate under an agreement that allows cab drivers to participate as Uber drivers should they want to. One of the rides I had was from a cab driver who also did double duty as an Uber driver. He told me he made more money working Uber than as a cab driver and enjoyed the experience better. No middleman (i.e., cab company) means more money in the driver’s pocket. I also found it interesting that when I called the cab company, they told me the wait for a cab was going to be 30 minutes, yet when I fired up Uber, I found a car only four minutes away and it turned out to be a cab from the same company!
Uber is revolutionizing public transportation in urban areas and is creating an entirely new way of doing business, one that is sure to quickly obsolete our traditional view of public transit.
Alvarez Technology Group, Inc.
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