My girlfriend: We’re late. We need to get a cab to the [Thanksgiving] dinner.
Me: I just talked to the cab company and they’re going to take forever. I’m trying Uber.
Her: There’s no Uber in DC.
Me [checks app]: Oh, look, there is! The car will be here in 10 minutes.
And that’s how I discovered that Uber is launching in Washington, DC. Today, it’s announcing to the capital that it’s ready for business, having spent the last month recruiting drivers, testing routes and everything else that goes into opening up in a new area. I recently talked to Rachel Holt, who’s leading Uber DC, to get some more details about how the company has worked out this expansion.
The first step is to figure out what the local market is looking for. DC is looking like a good target.
Yes, politicians have their own taxpayer-supported livery services, but DC also has the highest concentration of people with secondary degrees. Between the better-paid government employees, contractors, law offices, lobbyists, universities, and the emerging tech scene, “there are a lot of people who want a better experience,” Holt explains.
But unlike most cities (such as San Francisco), DC doesn’t artificially restrict the number of cabs, so getting them isn’t as big of a problem. However, the cars also tend to be run down, and service isn’t always great. And the thing about DC is that it’s a city of people who wear suits (also unlike SF). Uber’s black sedan-limos are providing cars to match.
DC also has some local issues that Uber can take advantage of. Cabs charge you extra for each additional stop, for example. The district is also stuck between two states and numerous counties, and many cab companies only serve some of them. If you’re downtown in the afternoon, you might have trouble getting a cab out to your home in the suburbs. Uber can ignore those constraints.
The company’s local team is also busy juicing demand by doing things like event sponsorships, and outreach to local businesses. An out-of-the-way restaurant, for example, might want to tell its patrons about Uber so they can rest assured about getting home when they’re done enjoying the wine list.
Of course, Uber’s real magic is software. It has also been refining how it expands to each new city. “Every minute and every day we’re collecting more and more data on where people are opening our app to figure out where biggest areas of demand are,” Holt says. That’s why we’ve needed a little runway ahead of a public launch.”
Charts and heat map visualizations show how the app is being used, that the company then uses to match peak demand areas at specific times. It looks at specific pieces of data like app opens, people who get cars, and people who can’t, and the number of minutes that it takes for cars to arrive.
The other factor is operations. Uber has been recruiting local people, including independent operators and small companies, to be on call for the service. It has already won many of them over, judging by the ones I’ve talked to in SF, and the one who drove us on Thanksgiving. Its pay structure is a flat fee that includes a generous tip. The software can calculate optimal coverage areas to reduce driving. And the software also cuts out dispatch operators, who sometimes play favorites with drivers at other cab companies.
While Uber is a luxury service, it’s also a good example of how a software startup can break into new physical-world markets and solve long-standing problems. It forces incumbents to try to improve, and shows other startups how they can go after similar types of problems. It’s this visceral impact that helped convince Shervin Pishevar, son of an immigrant cab driver in DC, to co-lead the company’s new $32 million round of funding last week.
The company is planning on expanding by two cities a month around the world. It also just launched in Paris, and is already available in San Francisco, Seattle, Chicago, New York, and Boston.