Taxis Are the Buggy Whips of Our Generation — But Not Really
The rise of ride sharing services has largely destroyed the wealth of a number of people who’ve provided taxi service. Why and what could have been done differently?
I’m a big fan of ride sharing services and use them so much that I’ve gotten used to the experience. I recently took a taxi and a funny thing happened. The ride ended, I grabbed my bag and got out. The cabbie started yelling at me and at first I was confused. Then it occurred to me, I hadn’t paid. The interaction of payment that doesn’t exist in ride sharing services, had slipped my mind. The new normal is to get on your way and give them the stars. It was strange. I apologized and paid the driver.
For years since the services arrived I’ve been saying:
We didn’t know taxis were broken till the ride sharing services fixed them.
I was proud of the line. In my mind it was clever and worded well. But what I missed was the ride sharing services, in adopting technology to deliver the service in a new way, had put a lot of human beings in a dire situation. Taxi drivers, who’d invested a ton of time and money in their medallions, were now basically broke.
What do you mean fixed?
By fixed I mean the services redesigned several parts of the experience and made it better.
Payment
Payment is stored so I don’t have to pay when I arrive and what used to take more time, doesn’t exist anymore…thus the problem I just described above and my faux pas. The application holds my information and the system takes care of payment. The experience in taxis of course is that I pay upon arrival exchanging cash or running my credit card, even though some taxis have now begun offering a similar payment option through their own applications.
Dispatch
Ride sharing altered central dispatch and created a distributed system such that anyone with the app could call a cab and any driver could grab the rider without having to go through Louis DePalma (remember the show Taxi?). I remember calling taxi services for a pickup and getting less than stellar reception. They’re working late night or long hours and didn’t care about the service they were providing to me, their customer. Why should these people have been upbeat and service oriented? Their services were the only game in town so there wasn’t a need to be gracious or care about the caller. Distributed dispatch means that ostensibly the nearer cars in the system are the ones who opt to pick you up because this reduces their time to destination but in general, anyone can grab you so they are bending over backwards for your ride. So generally ride shares pick up faster but also they’re entirely committed to giving great service. Why?
Ratings
Ride sharing allows you to rate the driver. This improves the human part of the service very much. A central dispatcher in the taxi system doesn’t care, and the driver cared just a bit more, but not really. In ride sharing, my ability to rate the driver and their ability to rate me, helps me get the car and helps them keep my ride. Taxis are containers that move people from point A to point B. Carrying cash meant that taxis were a target for criminals thus the heavy divider between the driver and the rider.
Location
My phone geolocates me and ride sharing takes advantage of this. In San Francisco, where ride sharing started, finding a cab was nearly impossible, with so few cabs on the roads. In NY you walk to a corner (or anywhere really,) raise your hand and hope a cab sees you. If it’s raining you get wet. If there are many others around, you might lose the cab. Ride sharing solves this. You request a pickup, your phone pinpoints your location, and the car arrives for YOU. With a central dispatch you’d have to describe where you were. They would copy down the address and then convey that to the driver and, like a game of telephone, information could get lost.
So ride sharing seems to have fixed all these problems? Sounds great right?
Well actually…
Ride sharing services are destroying (have destroyed) the lives of cab drivers who’ve sunk their life savings into taxi medallions. The following chart describes the value of taxi medallions in three cities at their approximate peak in 2013. Here’s an article describing their value today: https://www.nytimes.com/2017/09/10/nyregion/new-york-taxi-medallions-uber.html
If you don’t feel like reading it, suffice it to say, what they were worth at their peak in the chart below drops precipitously. Today they’re worth a great deal less…if anything.
The question is, do the ride sharing services care about this? Maybe, maybe not. Did they suspect that the disruption they were causing would send some people into bankruptcy?
But most importantly, if they had entered the New York or Boston markets differently — with an eye toward helping the taxi drivers rather than eliminating them, how would they have done so and would it have even been possible?
So the conversation at these services might have gone like this:
What about the cabs and their medallions? — Oh don’t worry about that, we’ll hire lobbyists and fight whatever issues we run into, because who cares, taxis are the buggy whips and we’re the automobile.
This is completely hypothetical…but plausible.
The problem with the buggy whip analogy — that buggy whips got innovated out of existence with the advent of the car (and how easily the concept is thrown around in MBA programs) — shows a complete disregard for the fact that the makers of buggy whips were human beings. That they’d sunk their lives into their business of making buggy whips. Lucky for them, they had a MUCH longer runway to transform their business and expertise in leather goods to start making leather steering wheel covers or however they survived. Cars didn’t immediately replace horses. Taxi drivers had almost no time to change gears, nor could they transform their existing business into something else. The medallions that the drivers held had often been passed down from generation to generation. It was often the family wealth. Yet with the advent of the driving services, the value of the medallions dropped to nothing. At least the buggy whip makers had transferable skills and tools to attempt to shift.
Further, after speaking with a government representative whose job was to act as a liaison to the cab drivers and companies, those folks were SUPER reluctant to change to adapt to the new models. This isn’t their fault. People are often reluctant to change. Either because they think things will always be the same or they don’t have the vision to see the future without them. This only makes them more human.
I’m all for free markets but let’s go into this with our eyes open. The technology we make has the capacity to make sweeping changes to the way people live their lives and do so very quickly. The “buggy whip” mentality puts the emphasis on the market but not the people involved. How can we, as designers and product developers consider the well being of the people within the “market we’re disrupting.”
If the services had entered the NY (or other major metropolitan markets) in a way as to incorporate the existing taxi industry, would it have been easier than fighting through lobbyists and legislation? Would it have been cheaper to approach the larger taxi companies and offer to provide their service through the taxis both to prove the model but also to engage the existing system? Must disruption always mean job loss?
I’d really like to see how we could introduce products and discuss “market inclusion” where we consider the market we’re intending to launch within and how we can introduce the new product or service in a way that enfranchises the markets we’ve formerly disrupted — and at the very least, be honest about the people involved and not just refer to them by the products they make.
