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  1. There’s been a lot of talk about ride share efficiency, performance, ride share driver pay, and so forth vs taxis.

    As the raw data from the ride share side is largely lacking – some data has been published, but never in such detail as to actually understand what is really going on – this debate is very difficult to resolve.

    However, luckily there was a study performed by the city of Seattle in 2013 which specifically examined all of the various aspects of the transport system: buses, limos, taxis, and ride shares.

    You can read the full report here: Seattle Final Report Master.pdf

    Key points of interest:

    1) While taxi numbers have increased – the amount of demand has increased greater than the increases in taxi numbers. However, this period has also seen the rise of increases in For Hire vehicles (think SuperShuttle vans) as well as limousine services.

    2) Mean utilization systemwide is slightly over 1 ride per hour

    3) For peak hours, however, the averages increase tremendously: for example, taxis average 4 to 5 rides per hour on Saturday night from 10 pm to 2 am, and 2.5 to 3 rides per hour from 6 pm to 10 pm.

    4) For the same period above, limos average 1.25 to 1.5 rides per hour from 6 pm to 10 pm, 2 rides from 10 pm to 12 am, and between 1 and 1.5 rides per hour from 12 am to 2 am

    5) Demographic breakdown of use: taxis are very even across the board. FHVs are skewed towards the very young and the very old. Limos decrease in usage with age, while ride share is heavily, heavily skewed towards very young.

    6) Income breakdown of riders of the different services was not surprising: all services are skewed towards the upper income levels. Limos have the largest percentages at the top 2 brackets, but ride share is heavily skewed towards middle income bracket and above ($50,000 to $100,000 per year). Poor people don’t take rideshare.

    7) Response time expectations for ride share were mostly under 5 minutes – actual measured response times were clustered between 10 minutes and 15 minutes with no region averaging under 7.92 minute response time

    How does the above square vs. my own experiences? When I was driving ride share for test purposes, I only drove during peak hours: i.e. mornings, evenings, and weekend nights.

    I averaged 2.12 rides per hour, and since I live in the middle of the peak area, I have no commute time. My business partner averaged 1.95 rides per hour, but he was commuting 1 hour each way (and this isn’t reflected in his rides per hour). Neither of us EVER had more than 3 rides in an hour. The main takeaway is that there are very fundamental differences between the maximum carrying capacity of ride share vs. taxis – as defined by the number of rides per hour.

    Other interesting notes: the number of limos in Seattle nearly doubled from 2011 to October 2013: 600 to 1100 (compare with about 1600 taxis). Clearly there is some form of major demographic shift going on here – which Uber likely is a factor (Uber was founded in 2009 and focused on limos originally).

    The takeaway? Driver pay is a direct function of number of rides. Average number of rides systemwide varies dramatically over the span of the full week, ranging from under 1 ride per hour to 5 rides per on at peak with the overall average being slightly over 1 ride per hour. Peak hours are well defined: 2 hours each for morning and evening weekday rush hours, plus 7 hours each Friday and Saturday dinner to late night return = 34 hours. For ride share, the peak productivity is much lower but the minimum productivity is somewhat higher – but pay is still determined by number of rides.

    If you’re going to make $40,000 per year and drive for 40 hours a week/2000 hours a year, you’d need to make $20 net per ride = $25 per ride paid by rider – assuming only 20% fees. Of course, this assumes you spend zero on gas, maintenance, etc.

    Complaints about taxi onboarding performance is largely a PR issue – average time to onboard was not detectably different between any of the ride services. The main differences were in perception.

    However, customer service levels and form of payment issues – 2 other common complaints about taxis – were validated by consumer data.

    Lastly, Rideshare and limo services are clearly contributing to greater demand for ride services.
  2. What is the “putting out” system?

    “The putting-out system was a system of domestic manufacturing that was prevalent in rural areas of western Europe during the seventeenth and eighteenth centuries.”

    “Domestic workers involved in the putting-out system typically owned their own tools (such as looms and spinning wheels) but depended upon merchant capitalists to provide them with the raw materials to fashion products that were deemed the property of the merchants.”

    Does this sound familiar to you, drivers for ride share companies? You own your own car, but the ride share company provides customers to you - with the payment and brand being owned by the ride share company.

    The article goes on to say:

    “A salient feature of the putting-out system was the high degree of control that the direct producers retained over their own labor processes. Working at home (or near home) and at their own pace, domestic producers were well positioned to balance work-time and leisure-time in accordance with the pre-capitalist preference for leisure.”

    Again, sound familiar? Ride share companies are constantly talking about how drivers can control their own schedule and hours.

    Why would I as a ride share driver care about the “putting out” system?

    The value of precedent is that we can see the ways in which actual practice differs from theory.

    The putting out system could do all that’s stated above, but what happened in reality was that some unscrupulous capitalists realized that with sufficient market dominance, they could control the prices at which raw materials were sold to producers – as well as the prices at which finished goods were bought back. Throw in lending of capital at high interest rates to purchase equipment (subprime auto loans), and you end up with a system every bit as brutal as outright slavery – except slaves had to be fed by their owners whereas putting out workers had to find their own food with the result sometimes being starvation.

    But the real danger of the putting out system wasn’t the debt and ‘company store’ abuses noted above.

    The real danger was that the merchant capitalists occupying a central position in the scheme effectively cut off the producers from the market. Without access to the overall market, there is no way for any producer to know if he was getting paid fairly or to find alternate suppliers/buyers.

    The existing taxi medallion system isn’t just a system to regulate the numbers of taxis – it also includes a political process by which taxi fares as well as driver’s and owner’s rights are balanced against each other and against passenger’s interests. This process evolved to replace the “market” and prevent abuses on both sides of the meter with the result that taxi fares don’t randomly and arbitrarily go up or down.

    What is the equivalent regulatory body for ride share companies? How will driver’s rights be protected?

    Most importantly, how will the ride share market function with large central entities - really, mostly just one, controlling both prices and access to supply (customers)?
  3. Does ride sharing help the environment?

    Many proponents of ride sharing have said this:
    The founder of Lyft:
    "John Zimmer is the co-founder and President of Lyft, the on-demand ridesharing platform, that was founded in 2007 with Zimride as its first of two products built to create a more social, sustainable and affordable transportation system.

    A UCLA professor quoted in the New York Times:
    "Juan Matute, director of the Local Climate Change Initiative at the University of California, Los Angeles, said that if more people used ride-sharing services — even just 3 percent of the population, he said — substantial reductions in driving in Los Angeles could result."

    An MIT report with both EPA and a Federal Transportation Board authors:

    With CEOs, the New York Times, UCLA, the EPA, MIT, and the Federal Transportation Bureau all chiming in - surely ride sharing must be good for the environment, right?

    Well, as an engineer I prefer information rather than press releases. The arguments used by these above people are as follows:
    1) Ride sharing gets cars off the road
    2) Ride sharing reduces traffic because of fewer cars
    3) Less traffic and less cars equals lower pollution and carbon (dioxide) emissions

    Let's examine these arguments one by one.

    Does ride sharing get cars off the road?

    The answer is no. If you have the same number of rides, you can't possibly be getting cars off the road - if we use the standard definition of the road being where cars drive and noting that ride sharing as practiced by Uber, Lyft, and so forth is primarily a taxi replacement - not carpooling. Carpooling does get cars off the road as fewer trips are taken.

    Ride sharing does get cars off the side of the road, as fewer cars are parked per ride.

    Thus to say that ride sharing gets cars off the road can only be correct if we're referring to street parking - it cannot be correct for actual transportation unless fewer rides are taken.

    Does ride sharing reduce traffic because of fewer cars?

    As above, the answer is also no. If the same number of rides is taken, you cannot possibly reduce the amount of traffic generated by the cars actually providing this transportation. In fact, I would argue that ride sharing makes traffic worse. For entrepreneurial purposes, I and my business partner drove ride share for more than a month each in order to understand the space at the ground level. As part of our research, we compiled very detailed data on the rides we delivered. What we found is that the miles driven to pick up the passenger is quite large compared to the actual ride delivered. Here's what we found:

    Excluding first ride/last ride in shift, airport rides, and commutes, the average ride distance we delivered in person was 2.25 miles for Uber and 2.52 miles for SideCar. However, the average "to-ride" distance - the distance we had to drive (unpaid) to pick up the passenger - was 1.27 miles and 1.8 miles respectively. Or in other words, for every mile a passenger was driven in Uber, 0.56 miles was driven to pick up the passenger. For every mile a passenger was driven in SideCar, 0.71 miles was driven to pick them up. Even the most strident opponents of free street parking say that the average distance driven to find parking is only 0.5 miles per trip (Donald Shoup, UCLA).

    If overall numbers are used, the ratios actually get worse because the long airport trips nearly always result in an empty car coming back. Including those long rides yields ratios closer to 1 mile driven to pick up the passenger vs. each mile driven with the passenger. These are numbers from our own experience; the actual industry average may be different but is unlikely to be completely off.

    So from the above data as well as common sense (note the above was pure point to point, no actual driving around looking for passenger distance was included), ride share rides actually mean MORE cars on the road per ride because of the long extra distances to pick up passengers.

    Which brings us to the last question: Does less traffic and less cars mean that ride sharing can reduce pollution and carbon (dioxide) emissions?

    The less traffic portion is clearly flat out wrong: Actual miles driven increases something like 40% to nearly 100% vs. people driving own cars.

    The less cars overall might be true, but what is the impact of this?
    According to this article:
    "The upshot is that – despite common claims to contrary – the embodied emissions of a car typically rival the exhaust pipe emissions over its entire lifetime."

    I understand this to mean that the pollution caused by manufacturing a car is roughly equal to the pollution created by operating it. If each ride sharing car is eliminating at least one car that isn't actually driven, then it would be safe to say that ride sharing is, in fact, reducing pollution. The problem, of course, is that few people buy a car in order to not drive it. The cars which are being used for ride sharing actually drive more miles per trip than a private vehicle - as much as 100% more, so its far from clear that the manufacturing pollution savings impact on overall environmental impact is real because of the additional miles driven by ride share - which is real.

    Some people would point out that ride share cars tend to be very gas economical - like a Prius. The good news is that yes, a Prius generates less pollution per mile driven. However, if the Prius replaces a still drivable car already on the road, you don't actually save anything because driving an already manufactured car creates less pollution than buying a new Prius. If a Prius generates 1/4 as much pollution for the driving portion, it still represents 62.5% new pollution (50% manufacturing + 25% of the 50% for operating pollution) over the life of the car vs. the 50% operational pollution for the car already on the road. Note I'm being very generous here as a Prius still needs tires, oil changes, brake pads, etc and I'm ignoring the extra miles driven for rideshare.

    I take this to mean that it is far from clear that ride sharing helps the environment or reduces traffic.

    Ride sharing does potentially take a lot of parked cars away - which is great for those who still have cars.

    What do you think?