The 'Uber effect' on the taxi industry

NEW YORK (FOX 5 NY) - I spend a lot of time at Fox 5 covering startups. One of the biggest compliments you can pay a startup is to call it a disrupter, changing not just local business, but entire industries across the country and even around the world.

Former TLC Commissioner Matthew Daus says we haven't had such a profound revolution since Henry Ford created the Model T. It's become larger than life in many ways. That "It," is the transformation of the taxi and black car business, thanks largely to Uber. In less than a decade, Uber seemingly has become larger than life.

Travis Kalanick and partner Garrett Camp came up with the idea while trying to get a cab in Paris back in 2008. Their solution: Tap your smartphone, get a ride. Uber launched in beta in San Francisco in summer 2010 with a seed round of just $200,000. In 2014 at the Time 100 red carpet, Kalanick said Uber had maybe, finally, gotten to mass market.

It is certainly mass market today. Uber is currently valued at nearly $70 billion, has over 10,000 employees, and more than a million drivers operating in 528 cities around the world.

Now Kalanick's dreams for the brand extend well beyond ride-hailing to driverless cars and flying taxis. Kalanick says if you're an inventor and a creator, you're constantly doing stuff and pushing boundaries, pushing beyond what people think is possible, even what you think is possible.

But Uber hasn't become one of the most highly valued private businesses in the world without financial trouble. While the company doesn't share its earnings publicly, Daus says Uber lost $2 billion last year and is not making money. He believes all of their eggs are in the autonomous vehicle basket.

And then there are the legal issues. Uber drivers have sued over pay and passengers have sued over sexual harassment. The latest harassment claim is from a female former engineer at Uber. The company hired former U.S. Attorney General Eric Holder to review it.

Not to mention, there are entire countries and cities unwilling to do business with the brand because outside of New York City, Uber often doesn't follow local regulations.

Daus says New York is the only city where Uber drivers are forced to get TLC licenses like everybody else. Still, cab drivers in New York claim Uber is putting them out of business, protesting the way the ride-hailing app operates.

But Daus, who was head of the TLC for 9 years and first put credit card machines in cabs, doesn't believe Uber is killing the taxi business at all. He says the taxi industry has lost about 13 percent of revenue. So he questions how one can claim a business that has only lost 13 percent of its sales is going under. He does acknowledge that Uber has eaten into some of the taxi business, but he believes Uber has also expanded the pie.

In fact, Uber has given rise to a number of other ride-hailing apps -- including Lyft, Juno, and Via -- that are evolving the way we travel, especially in New York.

Daniel Ramot, the CEO of Via, says the company's approach is quite different from some of the other transportation e-hail companies. He always thought of Via like a public transit system or a dynamic bus. Ramot says Via wasn't trying to disrupt the taxi industry. He says the company was really trying to come up with a better bus system.

Ramot and partner Oren Shoval launched ride-sharing app Via in 2013 with about 5 drivers and $1 million in funding, offering $5 shared rides on the Upper East Side during rush hour. Using a complex algorithm, Via picks up passengers at the nearest corner within two blocks, stopping for other riders along the way.
The big question at the beginning: would New Yorkers share?

Headquartered in New York City, with offices in Israel, Via now has about 200 employees, serving New York, Washington, D.C., and Chicago, and has raised over $100 million. Via now offers shared rides to the airport, starting at about $25. It's available throughout Manhattan, south of 125th Street, and in parts of Brooklyn. Just this year, Via started operating 24/7. Ramot says Via now moves almost a quarter of a million people a week.

Scarlett, whom we rode with in a Via, says she'd rather carpool than ride alone because it is an ecological choice. Driver David Franco, a retired architect, started working for Uber first, but now drives primarily for Via, because of guaranteed hourly earnings. He likes Via's flexible hourly scheduling and says he is paid by the hour, not the passengers or number of rides.

So will shared rides be the future for both drivers and passengers? And will Via catch up with a behemoth like Uber? Ramot says Via hopes to be moving a billion people within 5 years, not necessarily just in the U.S. but also with partners around the world.

Daus believes we're going to see cities transformed and that transportation will become more efficient and safer over time all because of this disruption.

While it is tough to say what the future will bring for the taxi industry or even public transportation in New York, one thing is certain: Uber, Via, and the yellow cabs all plan on being a part of it.