S1: On Wednesday afternoon, I caught up with New York cabbie Jaime Serrano as he was heading home from work.
S2: And J-Lo kept driving. And I’m doing this for the last 20, 23 years.
S1: I may buy his taxi medallion decades ago and paid more than $300,000 for it. What he was buying was exclusivity, the legal right to pick people up at airports, to drive them around the city, to operate as a taxi driver.
S2: I wasn’t paying for that privilege, you know.
S1: Over the last decade. That privilege evaporated because rideshare companies like Uber and Lyft can go to all the places Highway goes without the investment in a taxi medallion.
S2: If they don’t pay, he’s not paying for the same job that we do after we pay. That was $10. I think is fair. You know, for drivers, especially for owner drivers.
S1: It’s a story that’s pretty familiar around the world by now. Uber disrupts a taxi market. Cabbies become resentful of Uber. But in New York, this story just got a big surprise twist. Well, news on Uber today. The company is striking.
S3: A surprise deal that will.
S1: Allow you.
S3: To book a yellow cab in New York City.
S1: On its app. This is according to The Wall Street Journal. All of New York’s 14,000 cabs will soon be listed on the Uber app. Drivers like Hymie may find themselves in an awkward marriage with the company that upended their business in the first place. I asked him about it and he was pretty pragmatic. He says as long as he gets the kind of fares he would get in his yellow cab, he’ll do the trip.
S2: You know, if I close my trip and see this upgraded price, every penny I’m going through it. They already heater. I mean, if they respect our friends, why not?
S1: Today on the show, Uber’s founder once called Taxis Evil. Now the company has pulled a dramatic U-turn and teaming up with cabs is key to its future. I’m Lizzie O’Leary and you’re listening to what next? TBD a show about technology, power and how the future will be determined. Stick with us. The news that Uber would join forces with Newark’s taxi fleet was broken by Preetika Rana. She’s a reporter for the Wall Street Journal and she covers Uber.
S3: I was dialed in to this investor presentation that Uber’s chief mobility officer Andrew McDonald gave, and he said something really striking. He said We think that taxis are the future. And he outlined a really tall goal. He said he wants every single taxi in the world on the Uber platform by 2025. And so that’s what made my jaw drop. I’m just dialed into this meeting where the Uber guys are now healing. Taxi is the future. And I’m just like, What?
S1: I think we should go back and establish why this all seems so shocking. How would you have described Uber’s relationship to taxis? Even six months ago. A year ago?
S3: Traditionally, taxis have been enemy number one for Uber. The companies sort of burst onto the scene over a decade ago with the idea that it would completely disrupt the taxi industry. And at first, they were just fighting each other. You know, each wanted to drive the other out of business. So we would see taxi drivers snarl, traffic file court cases, protest outside Uber’s office.
S2: Furious taxi drivers turned burning tires into barricades.
S3: Uber was kind of doing the same thing. It was lobbying and it was filing court cases against unions and taxis Randi.
S1: Uber is turning to its customers today to get them to help lobby against proposed changes here at Logan Airport.
S3: So they haven’t been friends. Exactly.
S1: I wonder if you could run me through Uber’s playbook when they wanted to come into a city, when they wanted to muscle out taxis.
S3: I mean, Uber was just flush with venture capital money. So their playbook for consumers was using venture capital money to subsidize the rides. And to be honest, the service was pretty good in cities where public transport is sort of fractured. Uber really changed the way that we moved. It made it possible for anyone to become a driver. It made us all accustomed to the service at the touch of a button, and it modernized the taxi industry.
S1: The other side of Uber’s playbook often meant ignoring local laws, exploiting loopholes and regulations, or lobbying city and state officials to change the rules so that ridesharing companies were legal. It was a tactic that worked for Uber in cities around the world, just not everywhere.
S3: There were many countries actually that banned Uber from existing. And then there were other places that essentially put into effect rules that rendered uber useless. So one example is Barcelona. You know, in Barcelona, the local government introduced a rule that said that if you’re an Uber driver, you have to wait 15 minutes before you can pick up the passengers. So in effect, that was their way to make sure that the taxi industry thrives and they were successful. They drove Uber out of business. Uber said, we can no longer operate in Barcelona because as a writer, why would you book an Uber if you have to wait 15 minutes as a driver? That’s not serving your time well. So Uber essentially quit Barcelona.
S1: After years of pushing its way into different markets. Uber hit a massive roadblock. COVID It forced the company to rethink the way it did business in a lot of unexpected ways.
S3: The pandemic was a complete game changer. Initially, both Uber and taxis lost customers because you had widespread lockdowns across the world. Then when people started to get vaccinated, go out, there was this pent up demand. And for Uber, it sort of brought up a different problem. They had way too many writers and not enough drivers because Uber drivers went on to do other things. So Uber drivers, when to become delivery drivers, they started delivering groceries. And for the last year, Uber has been contending with a major labor shortage in the U.S. So they have way too many riders, but not enough drivers.
S1: At the same time, taxi drivers were facing their own issues.
S3: Now, what changed for taxi groups is that many taxi drivers in big cities like New York, these started to go bankrupt because demand for rides completely dried out. So taxi drivers are now back and are looking for ways to make up for the losses that they have made over the last two years. So so what happened here is that Uber said, look, we really need all the supply of drivers that we can get right now. And you guys, meaning the taxis, really need all the customers you can get. Let’s start talking about a marriage where we can get some of the drivers from this deal and you can get our customers.
S1: How did the specifics of this deal come about? I’m sort of curious. You’ve described this as a marriage. What was the courtship like?
S3: So this is quite an interesting story. The only reason they partnered with taxes early on is because it was the only way to survive in highly regulated markets. So they’ve done these deals in Europe and Asia, but only because it was the only way that they could survive in those markets. And what happened was increasingly, they saw that those deals are bringing them results and they started pitching it as an engine for growth. In the last year alone, Uber has added 120,000 taxi drivers to its platform around the world, which has been a four fold increase from 2020.
S1: Then, just as Uber was courting drivers overseas, a funny thing happened here in New York. Uber wanted to start advertising in new places. And in New York, a great place to reach captive eyeballs is the digital display on top of a taxi or inside it.
S3: So what happened was that Uber contacted one of these taxi tech companies that basically run the show in New York City and are the city’s license partners to say, Hey, can we advertise on the roof of New York City taxis? That’s how the two got talking. They said, look, let’s start to talk about an alliance that might benefit us both.
S1: I wonder if, as a company, Uber also thought partnering with taxis would allow them to have prices that were maybe a little more appealing to their riders?
S3: Oh, yes. We are going to see an impact, hopefully on rider prices, I should say at the outset. I don’t think prices for rides will ever go back to being, you know, the dirt cheap prices that we had pre-pandemic, because Uber is looking for ways to turn a profit. You know, they’re under pressure from investors. But what’s happened is prices have been elevated because of this labor shortage. And once they get more drivers onto the platform, prices will definitely inch down.
S1: When we come back, Uber’s plan for world taxi domination. Here in New York where I am. The City Taxi and Limousine Commission has traditionally been pretty hostile to two ridesharing companies. You talked to the deputy mayor, Mira Joshi, who oversees the TLC. Why did she think this was a good idea for the city and for the city’s taxis?
S3: You know, Mira was a former TLC commissioner herself. Yeah. And her thinking was this. She said, look, if this deal creates more economic opportunities for existing drivers without adding more and more cars onto the congested streets of New York, we’re in it. What she did take with a pinch of salt was this. She said, you know, Uber burst onto the scene a decade ago with the idea that it would completely disrupt or kill the taxi industry. Yes, they did modernize the taxi industry. They did make it possible for everyone to become a driver. They did make us accustomed to the service of the touch of a button, but they really didn’t kill the taxi industry. And so she said, we’re at a point now where it seems like both groups realize that after years of fighting each other, there can be a medium where they can coexist.
S1: In her reporting, Preetika spoke to several different drivers to get a sense of how they feel. Both cabbies like Chimay Serrano and drivers who have been exclusively doing rideshare.
S3: Some taxi drivers that I spoke to were receptive. The taxi tech companies that Uber has partnered with in New York City have their own taxi hailing apps, but their consumer base is no match to Uber’s. So for taxi drivers, if it’s bringing more customers into the fold, they’re all for it. A lot of taxi drivers said, you know, sometimes we ferry passengers to the outer boroughs from Manhattan and then we have to drive all the way back to the city empty handed. And that’s particularly painful right now. With gas prices at record highs. So now those drivers can just switch on the Uber app if they don’t get a street hail and hopefully get a ride back to the city. Where this gets interesting is for Uber drivers. What does this mean for them? Some Uber drivers I spoke to are pretty concerned. They said what this might do is create excess supply and some of them were worried that it might mean longer wait times for them to get rides, that Uber will no longer pay them the big bonuses that they have been paying to get drivers to return amid the labor shortage. So they were a bit worried about what this means for their earnings.
S1: There are a couple of quotes in your story that that really stand out to me. And and one is the Uber executive saying that 35% of people who started using the Uber app to hail taxis went on to use other Uber products like Uber Eats, which is its its food delivery service. And it made me wonder if even if this doesn’t end up being a net positive for their for their bottom line, if they view this as a way to expand their business, kind of no matter what.
S3: Uber stands to gain more than just on its rides business. Of course, a landmark deal like this where you’re onboarding the entire fleet of New York City taxis on onto your app is, of course, you know, going to have a direct impact on Uber’s revenue market share. But this is not just about the rides business. This is a plea by Uber to say, okay, we getting new consumers onto the fold through this taxi offering. And typically what their data has shown is that people who, you know, download Uber to hail a taxi end up using Uber, eats its delivery service. So this is really a plea by them to have crossed over effects.
S1: This idea that by 2025, Uber wants to list every taxi in the world on its app. I know how to say this kindly. It seems ambitious. Is is that really the future of the company, or is this just some sort of crazy Silicon Valley, you know, fantasy talk?
S3: I mean, it’s certainly ambitious. And that’s the question I asked Uber’s mobility chief as well. I said, this seems a bit too ambitious, don’t you think? And he says it is ambitious, but that he thinks it’s certainly possible. I think we should all take the claims that Silicon Valley startups make with a pinch of salt. But to Uber’s credit. When I first got wind of a deal like New York City, where they went in and overnight they basically have 14,000 taxis, the entire fleet of New York City onto its app. The speed with which they moved was pretty striking. And so if they’ve gone ahead and done this in one of their most lucrative cities, one of the biggest cities in the U.S., and a city that has typically been a fierce battlefield between Uber and taxi groups, it’s going to be far easier to go into the smaller cities and point to the model of New York and say, look, we’ve we’ve done this in one of the biggest markets in the U.S. So let’s join forces and do this here to.
S1: Peter Guralnick, thank you so much for your reporting and for talking with me.
S3: Thank you. It was a pleasure to be on the show.
S1: Pretty good. Rana reports on Uber for The Wall Street Journal. That is it for the show today. TBD is produced by Ethan Brookes where edited by Tori Bosch. Joanne Levine is the executive producer for What next? Alicia montgomery is the executive producer for Slate Podcasts. TBD is part of a larger what next family, and it’s also part of Future Tense, a partnership of Slate, Arizona State University and New America. I want to recommend you go back and listen to Tuesday’s episode of What Next? It’s crucial listening if you care about American kids and how they get their food. I’ll be back next week with more episodes. And Lizzie O’Leary, thanks for listening.