Catching the next cab disruptor

San Francisco based private car hailing service Uber has set up shop in Sydney in what is only its second foray outside of the US. While the company is running on “stealth mode”, with a limited number of black Holden Caprices made available to beta testers, Uber's moves will be closely watched by the local taxi industry.

The Uber service is available via Android/iPhone apps or SMS in several North American cities and after launching a service in London four months ago, Uber clearly sees enough potential in the Australian market to warrant the investment.

The outfit aims to be a disruptive conduit between users and private hire car service providers, removing the friction and angst that often accompanies the process of trying to hail or book a taxi. It does not own hire cars or employ drivers directly, preferring to signup existing licenced drivers as partner service providers.

Uber's entry into the Australian market several weeks after advertising in the Silicon Beach discussion forum that they were looking to hire a local operations manager and community manager, signals that they believe the harbour city is ill served by a taxi industry rife with inefficiencies. However, it should be under no illusions about the challenges it faces.

 The company's blog notes “Our First Fleet is being tested in Australia and we're bound to hit some snags.  Over the coming weeks, we'll be tinkering with our pricing, placement, and positioning. While we're in ‘test mode', you can request an Uber, but be aware that availability will be limited until our official launch.”

The real challenge for Uber isn't going to be user adoption or signing up service providers but the backlash it will get from the traditional operators , who are none too pleased about the emergence of upstarts like Uber.

A magnet for controversy

Since first gaining media attention in mid to late 2010, Uber has quickly become a magnet for complaints from the traditional taxi industry and the licensing authorities in various US cities and states. Uber was recently forced to withdraw from a trial with some participating New York yellow cabs after major disagreements with the city's Taxi and Limousine Commission, which threatened to remove taxi licences from any driver who was paid for rides by customers through Uber.

In Chicago they are getting sued by several taxi companies for directly making arrangements with existing taxi drivers to fulfil Uber ride requests, bypassing the network dispatching systems.

The international Taxicab, Limousine & Paratransit Association (TLPA) went so far as to issue a press advisory a few weeks ago stating it considers ”certain smart-phone apps such as Uber, to be ‘rogue' services operating outside of the public's best interests … such apps are a danger to public safety and operate in violation of community standards for taxi and limousine transportation in terms of passenger safety, access, non-discrimination and regulated fares”.

While some of the statements in the advisory are exaggerated, it does make several good points. The traditional taxi industry has to serve everyone while Uber cherry-picks affluent credit card equipped customers.  Uber also “equips each driver with a smartphone that provides information for the fare based on time and GPS readings [however] these devices are so imprecise the federal government has not approved them for determining ground-transportation fares”.

Taking tips from goCatch

If Uber is serious about making a mark in Australia then perhaps it might have to take a leaf out of its highly regarded local rival goCatch. Rather than antagonise the local taxi industry the multi award winning local outfit has attempted to win friends and influence through partnerships, as evidenced by their deal with GM Cabs signed at CeBIT Australia 2012.

Co-Founder of goCatch Andrew Campbell isn't too concerned about Uber's entry into the Australian market, telling Technology Spectator that “Uber are a really exciting and disruptive player in the peer to peer limousine market. They are a 'rock star' company and have done a great job with user experience and with generating hype. However, they will not help you get a taxi”.

Campbell's confidence isn't entirely misplaced given goCatch's impressive stats.

“We are going well and now have over 9,500 taxi driver registrations, close to 100,000 passengers and we have provided drivers with over $2,280,000 worth of jobs,” Campbell says.

Interestingly, Campbell also points out that the goCatch is on a similar road to Uber when it comes to spreading its wings overseas. The only catch is that San Francisco-based Uber has plenty of cash in its pocket, while goCatch has to work a lot harder. Reflecting on the difference between raising capital in Australia versus in the USA, Campbell mused that “if the Australian early stage capital market was more conducive, we'd be in the USA already. We will get there, but it will be via a route that is guerrilla and viral. As it happens, we already have passengers and drivers connecting via goCatch in three cities in the USA”.

Rating the experience

Most articles about Uber or goCatch refer to the customers experience but few if any include first hand discussions with the drivers who participate in each service. I recently used both services in Sydney, San Francisco and Seattle to experience goCatch and Uber first-hand.

For my first trip I got in the taxi of a Silver level goCatch driver for a ride to Sydney Airport early in the morning to check-in for a long haul flight to the USA. In terms of the cost goCatch charges exactly the regulated taxi fare. The driver enthusiastically hoped that goCatch does well and more taxi users use the app to hail cabs.  He said what it provides him is bonus trips on top of what the radio cab system sends him, filling in gaps of time during which he wouldn't be earning anything.

He thought that one of the key benefits of the goCatch app from a user's perspective is that they are able to see the moving taxi and driver status on their mobile screen. Drivers are given incentives to earn points for good behaviour, which leads to status upgrades from Bronze to Silver to Gold that result in higher priority for getting jobs.

Moving on to the USA, I discovered that Uber requires users to register online, store a credit card number in their system and verify their email address. The catch is that users had to have a US mobile number, so I couldn't use the app straightaway upon landing in San Francisco.

The cost of an Uber ride is always more than the equivalent traditional taxi fare but varies depending on which city you're using it in so it pays to visit their site and see what the base rate, fixed fare and other options are. Through the Uber app map you can watch your chosen driver navigate traffic on their way to reach you, with an onscreen estimate as to how many minutes they will take, as well as SMS updates. The app allows users to communicate with the driver and since your mobile is in the system, the driver can call you if they need to clarify your pickup location or explain why they are delayed if stuck in traffic.

Later on during the trip I needed to travel from the SOMA area of San Francisco to the Amtrak office. The traffic outside my accommodation was dense and it would have been impossible to flag a normal taxi passing by.  Luckily by then my smartphone was equipped with a T-Mobile USA SIM. So I stepped outside, got a GPS lock for the pickup address and used the Uber app to get a nearby Lincoln hire car driven by 94 per cent (4.7/5) rated driver Toumi who arrived within four minutes. After the ride I got a detailed receipt via email.

A week later in Seattle I hailed an Uber town car driven by 96 per cent (4.8/5) rated driver Filmon to get me across town to catch a shuttle bus to the Alaska Marine Highway. Filmon told me that thanks to Uber his income from driving had risen and he was happy with the types of customers who used the service.

The drivers and users of both services seem to respectively love the increase in how efficiently they can use their car to generate income and the disruptive improvement in service compared to traditional phone taxi booking services, which may or may not turn up.

By rewarding drivers with higher customer ratings for good service both Uber and goCatch create a feedback loop that encourages better driver service, which in turn rewards drivers with the ability to win more jobs and earn more money.

Where the two outfits differ is approach. While goCatch has opted to take a conciliatory approach with the traditional cab networks, Uber has taken what could be seen as the more arrogant approach of fighting head to head with regulators and the taxi industry. It will be interesting to see which strategy proves to be more commercially successful in the long run.