Uber's Economics vs. Its Users

It's rare that I find a service or tool that changes the way I go about my day to day life. It's much more common to find something that seems really interesting/cool, have it go into regular rotation, and then see it drop. In order for something to stay in frequent rotation, it has to fit into one of several categories:

  1. It has entertainment value beyond pure novelty. Instagram seems to have cleared that hurdle.
  2. It allows me to do something hugely useful that I'd not been able to do before. Cellphones certainly did that.
  3. It materially reduces the friction of doing something I already do/want to do. Dropbox does that.

At the same time, something that meets one of these hurdles can still fail because the cost of using it is too high. For me, that cost has always broken down simply to one of two factors:

  1. The dollar cost.
  2. The cost in time/frustration due to poor user experience.

If either of those cross a hard to define threshold, I'll give up. That line is hard to predict, because there's rarely a clear equivalency in the units by which I measure the value and the cost. Still, I know it when I see it.[1]

Recently, though, I've been thinking about a different dynamic, one that describes my relationship with Uber. Given the frequency with which I use Uber, I should love it. The design is great, and it really does make ordering a car easy in most circumstances. However, I hate using Uber. In fact, I only use it because it is currently the best option for me to get to and from the airport.[2]

I only realized recently how deeply I dislike using Uber. A few weeks ago, I pulled out my phone to call an Uber to my apartment in NYC. As I did so, I realized I had tensed up - stressed about what I was about to discover. Would the fare be normal? 1.5x? 3x? If surge pricing was in effect, I knew that I'd have to start calculating trip costs in my head to compare the different options, which surge at different rates. Then I started considering what the surge curve would look like throughout the approximately 30 minute window I give myself to leave. Would it rise throughout and sharply fall? Would it stay flat? When, exactly, would my optimal time to call a car? The service basically has me thinking incredibly hard to figure out whether or not I want to use it.[3]

What Uber has done is forced me to trade inconvenience and transparency for convenience and a total lack of transparency plus a huge amount of uncertainty. I can't recall another time I've been forced into such a stark and extreme choice in order to use an application that trumpets its own usability so heavily.

The source of my frustration lies with Uber's embrace of a clinical application of supply/demand methodology. On the surface, I actually agree with their argument that more demand should yield higher prices.[4] However, the more I think about their logic, the less it makes sense. Uber prides themselves on their control of the data of trips. They claim that that data feeds complex algorithms that spit out the surge pricing levels. However, if their data is so incredible, they should be significantly better at predicting surges before they happen, thereby mitigating the overall level of surges and the rapidity with which they appear and dissipate. Maybe they even are doing this on some level, but if they are, it certainly isn't apparent to users.[5]

It strikes me that Uber is playing a very dangerous game. Travis and his team have proven themselves to be incredibly good at execution. I worry, though, that their focus on that execution and their near religious belief in the power of economics will lead them to continue doing things that make users very angry. Uber has been successful because they made something people wanted, and made that thing accessible. They're currently skirting the edge of making that thing people want very distasteful to use.  At this stage, I would drop Uber in a heartbeat if another service offered similar access with increased transparency, even at a higher price point.[6] Anecdotally, I don't appear to be the only person that feels that way.


[1] I'll never forget my 12th grade AP History teacher, Mrs. Broder, teaching us about Potter Stewart's use of that phrase in reference to obscenity.

[2] This is a really big factor in their favor, but it also feels incredibly temporal.

[3] This might be one of the biggest violations of Steve Krug's "Don't make me think" mantra I've yet encountered with a consumer application.

[4] Which mitigates my frustration only very slightly.

[5] For instance, they know I typically take a car on Monday mornings, and could easily text me a warning that, if I was planning a trip the next day, I should be aware that a surge is likely. Alternatively, they could make pricing out the different options transparent and simple to find.

[6] And there many trying: Instantcab (now Summon), Lyft, Hailo, Sidecar, etc.