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		<title>Felix Salmon Pinpoints the Problem: &#8216;Uber Is a Car Service for Computers&#8217;</title>

		<comments>http://betabeat.com/2012/01/felix-salmon-pinpoints-the-problem-uber-is-a-car-service-for-computers/#comments</comments>
		<pubDate>Tue, 03 Jan 2012 15:07:55 -0400</pubDate>
					<link>http://betabeat.com/2012/01/felix-salmon-pinpoints-the-problem-uber-is-a-car-service-for-computers/</link>
			<dc:creator>Nitasha Tiku</dc:creator>
				
		<guid isPermaLink="false">http://www.betabeat.com/?p=25715</guid>
		<description><![CDATA[<p><img class="alignleft size-full wp-image-25734" style="margin-top: 5px; margin-bottom: 5px; margin-left: 10px; margin-right: 10px;" title="felix salmon head" src="http://nyobetabeat.files.wordpress.com/2012/01/felix-salmon-head.png" alt="" width="126" height="189" />When someone forwarded Betabeat Aubrey Sabala's New Year's Eve <a href="https://twitter.com/#!/Aubs/status/153532514122743808">Uber misgivings</a> ("@Aubs While I’m glad I’m home safely, the $107 charge for my @<a href="http://twitter.com/intent/user?screen_name=Uber">Uber</a> to drive 1.5 miles last night seems insanely excessive. :(") before we'd even woken up Sunday morning to greet 2012, we knew the holiday backlash against the car service app was on its way. (A different type of holiday backlash, mind you, than the <a href="http://blog.uber.com/2011/10/26/halloween-surge-pricing-get-an-uber-at-the-witching-hour/">Halloween 2010 incident that left 95 percent of customers stranded</a>.)</p>
<p>Not everyone was appeased by Uber CEO Travis Kalanick's <a href="http://allthingsd.com/20120101/uber-ceo-responds-to-new-years-eve-complaints-considers-dynamic-pricing-for-weekends/">apology the next day</a>, in which he called the evening an overall success despite 95 complaints and 15 users who didn't get the surge-pricing notifications that a safe, prompt, and sober driver on New Year's Eve was going to cost them a pretty penny, or in some cases, a pretty Benjamin.<!--more--></p>
<p>"They're a combination of <a href="https://twitter.com/#!/CJN/status/153845611249152001">smug and aloof</a> in dealing with customers. arrogant entrepreneur syndrome. . . His <a href="https://twitter.com/#!/CJN/status/153849437427482624">uber pedantic response </a>to that variable pricing debacle last night was just ugh," tweeted the Barbarian Group's Colin Nagy, after Betabeat asked him what he meant by: "<a href="https://twitter.com/#!/CJN/status/153765893736890368">Lots and lots of questionable judgement</a> from @<strong>uber</strong> since the start. I want to love but they make it hard sometimes."</p>
<p>Thankfully today, <a href="http://blogs.reuters.com/felix-salmon/2012/01/03/uber-and-the-cognitive-zone-of-discomfort/">Felix Salmon</a> delves into that wonky pricing model to figure out why, exactly, exorbitant prices for a luxury service rub consumers the wrong way.</p>
<p>A number of factors go into Uber's pricing system, as Mr. Salmon explains:</p>
<p>1. "<strong>Uber raises its prices pretty much in lockstep with local taxi rates</strong>," which means surge pricing in cities where cabs are already expensive can quickly get out of hand. "It’s easy to see why people in Washington feel happier grabbing an Uber  to get home than people in San Francisco do. If you get stuck in traffic  and it takes 30 minutes to get home, that’s $29.50 in Washington; in  San Francisco, it would be $45.50."</p>
<p>2. "Uber has dynamic GPS-based pricing which automatically <strong>charges you on a  per-mile basis whenever the car is going faster than 11mph</strong>, even if it’s  only for a brief period of time."</p>
<p>3. Add to that, <strong><a href="http://blog.uber.com/2011/12/31/nye-surge-pricing-explained/">the surge pricing</a>, like what happened on New Year's Eve, when demand gets tight</strong>.</p>
<p>As you can see, the internal calculation quickly gets more complicated than an app-savvy early-adopting user is prepared to make, even, perhaps, before they imbibed all that cheap champagne.</p>
<blockquote><p>"If Uber pricing was continuously dynamic, prices might well come down  during periods of light demand, especially in the early mornings. <strong>But  our brains <em>hate</em> having to do dynamic cost/benefit calculations</strong>.  Instead, we rely on simple heuristics: “I should always take the subway  if I can”, “cabs in New York are cheap enough that I can take them when  I want to”, “cabs in London always cost more than you think they will”,  “I can afford Uber if it’s just a short ride”, that sort of thing. When  we think about the costs and benefits of various different types of  transportation, we don’t actually think in dollars, most of the time,  just in terms of a vaguer cheap/expensive spectrum. D<strong>ynamic pricing like  Uber’s New Year’s experiment takes us out of that comfort zone, and  people <em>hate</em> being forced to re-think these things.</strong></p>
<p>. . . <strong>Uber, in other words, is a car service for computers, who always do  their sums every time they have to make a calculation</strong>. Humans don’t work  that way. And the way that Uber is currently priced, it’s always going  to find itself in a cognitive zone of discomfort as far as its  passengers are concerned."</p></blockquote>
<p>It short: Nice service, needs more humanity.</p>
]]></description>
		<content:encoded><![CDATA[<p><img class="alignleft size-full wp-image-25734" style="margin-top: 5px; margin-bottom: 5px; margin-left: 10px; margin-right: 10px;" title="felix salmon head" src="http://nyobetabeat.files.wordpress.com/2012/01/felix-salmon-head.png" alt="" width="126" height="189" />When someone forwarded Betabeat Aubrey Sabala's New Year's Eve <a href="https://twitter.com/#!/Aubs/status/153532514122743808">Uber misgivings</a> ("@Aubs While I’m glad I’m home safely, the $107 charge for my @<a href="http://twitter.com/intent/user?screen_name=Uber">Uber</a> to drive 1.5 miles last night seems insanely excessive. :(") before we'd even woken up Sunday morning to greet 2012, we knew the holiday backlash against the car service app was on its way. (A different type of holiday backlash, mind you, than the <a href="http://blog.uber.com/2011/10/26/halloween-surge-pricing-get-an-uber-at-the-witching-hour/">Halloween 2010 incident that left 95 percent of customers stranded</a>.)</p>
<p>Not everyone was appeased by Uber CEO Travis Kalanick's <a href="http://allthingsd.com/20120101/uber-ceo-responds-to-new-years-eve-complaints-considers-dynamic-pricing-for-weekends/">apology the next day</a>, in which he called the evening an overall success despite 95 complaints and 15 users who didn't get the surge-pricing notifications that a safe, prompt, and sober driver on New Year's Eve was going to cost them a pretty penny, or in some cases, a pretty Benjamin.<!--more--></p>
<p>"They're a combination of <a href="https://twitter.com/#!/CJN/status/153845611249152001">smug and aloof</a> in dealing with customers. arrogant entrepreneur syndrome. . . His <a href="https://twitter.com/#!/CJN/status/153849437427482624">uber pedantic response </a>to that variable pricing debacle last night was just ugh," tweeted the Barbarian Group's Colin Nagy, after Betabeat asked him what he meant by: "<a href="https://twitter.com/#!/CJN/status/153765893736890368">Lots and lots of questionable judgement</a> from @<strong>uber</strong> since the start. I want to love but they make it hard sometimes."</p>
<p>Thankfully today, <a href="http://blogs.reuters.com/felix-salmon/2012/01/03/uber-and-the-cognitive-zone-of-discomfort/">Felix Salmon</a> delves into that wonky pricing model to figure out why, exactly, exorbitant prices for a luxury service rub consumers the wrong way.</p>
<p>A number of factors go into Uber's pricing system, as Mr. Salmon explains:</p>
<p>1. "<strong>Uber raises its prices pretty much in lockstep with local taxi rates</strong>," which means surge pricing in cities where cabs are already expensive can quickly get out of hand. "It’s easy to see why people in Washington feel happier grabbing an Uber  to get home than people in San Francisco do. If you get stuck in traffic  and it takes 30 minutes to get home, that’s $29.50 in Washington; in  San Francisco, it would be $45.50."</p>
<p>2. "Uber has dynamic GPS-based pricing which automatically <strong>charges you on a  per-mile basis whenever the car is going faster than 11mph</strong>, even if it’s  only for a brief period of time."</p>
<p>3. Add to that, <strong><a href="http://blog.uber.com/2011/12/31/nye-surge-pricing-explained/">the surge pricing</a>, like what happened on New Year's Eve, when demand gets tight</strong>.</p>
<p>As you can see, the internal calculation quickly gets more complicated than an app-savvy early-adopting user is prepared to make, even, perhaps, before they imbibed all that cheap champagne.</p>
<blockquote><p>"If Uber pricing was continuously dynamic, prices might well come down  during periods of light demand, especially in the early mornings. <strong>But  our brains <em>hate</em> having to do dynamic cost/benefit calculations</strong>.  Instead, we rely on simple heuristics: “I should always take the subway  if I can”, “cabs in New York are cheap enough that I can take them when  I want to”, “cabs in London always cost more than you think they will”,  “I can afford Uber if it’s just a short ride”, that sort of thing. When  we think about the costs and benefits of various different types of  transportation, we don’t actually think in dollars, most of the time,  just in terms of a vaguer cheap/expensive spectrum. D<strong>ynamic pricing like  Uber’s New Year’s experiment takes us out of that comfort zone, and  people <em>hate</em> being forced to re-think these things.</strong></p>
<p>. . . <strong>Uber, in other words, is a car service for computers, who always do  their sums every time they have to make a calculation</strong>. Humans don’t work  that way. And the way that Uber is currently priced, it’s always going  to find itself in a cognitive zone of discomfort as far as its  passengers are concerned."</p></blockquote>
<p>It short: Nice service, needs more humanity.</p>
]]></content:encoded>
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			<media:title type="html">jhanasobserver</media:title>
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		<title>New York&#8217;s New Taxi Plan Could Be Bad, Bad News for Uber</title>

		<comments>http://betabeat.com/2011/12/new-yorks-new-taxi-plan-could-be-bad-bad-news-for-uber/#comments</comments>
		<pubDate>Tue, 27 Dec 2011 10:01:50 -0400</pubDate>
					<link>http://betabeat.com/2011/12/new-yorks-new-taxi-plan-could-be-bad-bad-news-for-uber/</link>
			<dc:creator>Adrianne Jeffries</dc:creator>
				
		<guid isPermaLink="false">http://www.betabeat.com/?p=25275</guid>
		<description><![CDATA[<p><a href="http://Uber.com"></a></p>
<p><a href="http://Uber.com"> </a></p>
<div class="mceTemp"><a href="http://Uber.com"></a>
<dl id="attachment_25277" class="wp-caption alignnone" style="width: 586px;"><a href="http://Uber.com"></a>
<dt class="wp-caption-dt"><a href="http://Uber.com"></a><a href="http://www.flickr.com/photos/henriquev/5901327519/sizes/z/in/photostream/"><img class="size-full wp-image-25277 " style="margin-top: 5px; margin-bottom: 5px; margin-left: 10px; margin-right: 10px;" title="HDRtist Pro Rendering - http://www.ohanaware.com/hdrtistpro/" src="http://nyobetabeat.files.wordpress.com/2011/12/5901327519_cd9fe53e66_z.jpg" alt="" width="576" height="418" /></a></dt>
<dd class="wp-caption-dd">(flickr.com/henriquev)</dd>
</dl>
</div>
<p>Uber, the application that lets you order a car service from your phone, has had trouble gaining traction and establishing reliable service in New York City, where being able to navigate the city's byzantine transportation system is a badge of honor that demarcates real New Yorkers from the newbies and the tourists.</p>
<p>Now the startup has a new challenge: <a href="http://transportationnation.org/2011/12/20/deal-reached-on-controversial-nyc-taxi-plan/">a recently-announced taxi plan</a> to add 2,000 yellow cabs while also permitting 18,000 livery cabs to pick up street hails.<!--more--></p>
<p>The latter provision could actually be good for Uber, as it reduces the number of cars on demand with a phone call; but the former is pretty bad. And in general, more cabs on the street and a more open market leaves less room for the disruptor from San Francisco.</p>
<p>Another plan provision that is still being negotiated could also screw Uber--Governor Andrew Cuomo is considering adding conditions that would <a href="http://www.nydailynews.com/opinion/gov-cuomo-taxi-plan-a-mess-a-solution-article-1.996274#ixzz1hk90jKoM">force a certain percentage of cars to be wheelchair-accessible</a>, at $40,000 per car with a $15,000 subsidy. Uber did not immediately respond to request for comment.</p>
<p>Uber's New York office had some nasty turnover: two of three employees abruptly resigned in September, <a href="http://www.betabeat.com/2011/09/20/exclusive-shake-up-and-resignations-at-ubers-new-york-office-ceo-travis-kalanick-explains/">just four months after the office opened</a>. They've been replaced and now the startup is <a href="http://www.betabeat.com/2011/12/06/uber-gets-new-logo-preps-for-europe-launch-but-is-the-startup-phoning-it-in-in-new-york/">launching in cities abroad</a> as competitors like Groundlink chase its tail.</p>
]]></description>
		<content:encoded><![CDATA[<p><a href="http://Uber.com"></a></p>
<p><a href="http://Uber.com"> </a></p>
<div class="mceTemp"><a href="http://Uber.com"></a>
<dl id="attachment_25277" class="wp-caption alignnone" style="width: 586px;"><a href="http://Uber.com"></a>
<dt class="wp-caption-dt"><a href="http://Uber.com"></a><a href="http://www.flickr.com/photos/henriquev/5901327519/sizes/z/in/photostream/"><img class="size-full wp-image-25277 " style="margin-top: 5px; margin-bottom: 5px; margin-left: 10px; margin-right: 10px;" title="HDRtist Pro Rendering - http://www.ohanaware.com/hdrtistpro/" src="http://nyobetabeat.files.wordpress.com/2011/12/5901327519_cd9fe53e66_z.jpg" alt="" width="576" height="418" /></a></dt>
<dd class="wp-caption-dd">(flickr.com/henriquev)</dd>
</dl>
</div>
<p>Uber, the application that lets you order a car service from your phone, has had trouble gaining traction and establishing reliable service in New York City, where being able to navigate the city's byzantine transportation system is a badge of honor that demarcates real New Yorkers from the newbies and the tourists.</p>
<p>Now the startup has a new challenge: <a href="http://transportationnation.org/2011/12/20/deal-reached-on-controversial-nyc-taxi-plan/">a recently-announced taxi plan</a> to add 2,000 yellow cabs while also permitting 18,000 livery cabs to pick up street hails.<!--more--></p>
<p>The latter provision could actually be good for Uber, as it reduces the number of cars on demand with a phone call; but the former is pretty bad. And in general, more cabs on the street and a more open market leaves less room for the disruptor from San Francisco.</p>
<p>Another plan provision that is still being negotiated could also screw Uber--Governor Andrew Cuomo is considering adding conditions that would <a href="http://www.nydailynews.com/opinion/gov-cuomo-taxi-plan-a-mess-a-solution-article-1.996274#ixzz1hk90jKoM">force a certain percentage of cars to be wheelchair-accessible</a>, at $40,000 per car with a $15,000 subsidy. Uber did not immediately respond to request for comment.</p>
<p>Uber's New York office had some nasty turnover: two of three employees abruptly resigned in September, <a href="http://www.betabeat.com/2011/09/20/exclusive-shake-up-and-resignations-at-ubers-new-york-office-ceo-travis-kalanick-explains/">just four months after the office opened</a>. They've been replaced and now the startup is <a href="http://www.betabeat.com/2011/12/06/uber-gets-new-logo-preps-for-europe-launch-but-is-the-startup-phoning-it-in-in-new-york/">launching in cities abroad</a> as competitors like Groundlink chase its tail.</p>
]]></content:encoded>
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