What If UberCab Pulls An Airbnb? Taxi Business Could (Finally) Get Some Disruption

If you live in San Francisco and you haven’t tried UberCab yet, do it. The service, which we first covered in July, eliminates everything bad about a taxi experience. In my order, that’s flagging one down, finding the cash to pay, and being in a sometimes disgusting car. For bonus points, I always enjoy negotiating whether or not I get air conditioning in the summer in NY.

UberCab contracts with black car services – mostly Towncars and Escalades. There’s a lot of unused inventory in those businesses and they are happy to work with someone who eats up that inventory. As a user you download an iPhone app (I have it on my iPad) and add your credit card information (that’s the last time you ever have to deal with that). When you want a car to pick you up you hit a button. The app knows where you are and finds a car and driver nearby. The driver accepts via his/her own iPhone app, and you then get to watch them come to you on a map with a pretty darn good estimate of the number of minutes it will take for them to get there. When they arrive you get in the car and tell the driver where you want to go. When you get there you see the charges and accept them, which are then billed to your credit card, tip included. A receipt is emailed to you. And then each side gets to rate the other – I love the fact that the driver rates the passenger, too. Makes for good tips and a happy overall transaction. Watch a demo video here.

When I tried UberCab a few days ago I had to wait just 5 minutes for the car to arrive (a big Mercedes), and the overall experience was way better than a taxi.

The charges are 1.5x taxi rates, and it’s worth it. You’re in a much more comfortable car and you don’t have to waste time finding a cab in the first place, a real problem in San Francisco. I’ll use this all the time now when in San Francisco.

The company is planning to expand to other markets, so you may not need to wait long to use it (and if they move too slow, others will pop up anyway).

But here’s where things get really interesting – the difference between UberCab and its various competitors is that the driver uses his own iPhone app, not some clunky one-use device installed in his car. That means there’s no technical barrier to anyone becoming an UberCab driver. Which means that anyone with a car, theoretically, could join the network and start picking people up.

That’s exactly like Airbnb for people’s homes, and Square for credit card transactions. And don’t think people won’t want to do this – drivers generally make around $50 per hour.

There’s no reason I couldn’t become a UberCab driver and maybe charge less than others for driving – meaning competition will drive the rate down to some sort of equilibrium pricing. I can also sell myself based on the car I’m driving (hybrid, SUV, whatever), and my overall rating.

What’s standing in the way of all this? Not much. You need a special type of license to drive other people and your insurance rates will probably double or triple. But UberCab could help new drivers get through that paperwork and reduce the friction.

In most cities today you need to purchase or lease a medallion to drive a taxi. That’s just a way of keeping out competition and keeping rates high – it has nothing to do with making sure only qualified people drive those cars. In most cities you can drive people outside of taxis but you can’t let them flag you down, a big competitive disadvantage. With UberCab they’ve solved that problem – click a button and car arrives in a few minutes wherever you are.

Instead of looking for pedestrians to flag you down, wasting gas and not being the safest road aware driver, UberCab drivers will just park near where they know that a lot of clicks happen and watch their phone, bidding and grabbing those nearby clicks as they come through.

I can imagine it now – click a button and see a variety of options. A five star rated driver 15 minutes away in a late model Prius at 2x taxi rates, or a 1975 Camero 1 minute away with a three star rating for .5x taxi rates. Choose your car, driver and price and get exactly what you pay for. And help break the back of the taxi medallion evil empire.