1. The Taxi Service’s Worst Nightmare
By: Mitch Casey
If you haven’t heard of Uber, you will. Uber is a car
ride-sharing service that was introduced in San
Francisco in 2009, and has since spread like wildfire.
A 2014 study shows that Uber is now in 47 U.S. cities
and 35 countries.1 Uber’s appearance is causing
drama in the taxi industry, and it has led to serious
concern for taxi service companies and taxi drivers.
To gain a solid understanding of why Uber is causing
drama, we will look at why Uber developed in the
city of San Francisco, the impact Uber is having on
the taxi industry in San Francisco, and the reasons
why Uber is making such an extravagant entrance.
Why Uber?
San Francisco is a big city. According to the 2014
consensus, San Francisco hosts close to one million
occupants in a 47 square mile area, and the
population is steadily increasing.2 However, the cost
of living in San Francisco is high. According to CBS
News, San Francisco is the fourth most expensive
city to reside in in the United States.3 Because San
Francisco is crowded and expensive, residents want
quick, easy, and affordable transportation. The
founders of Uber saw potential for a more
affordable, innovative, and
tech-savvy solution to the transportation pains in
San Francisco.
Impact of Uber
Uber’s growth is causing a large decrease in the rides
given by conventional taxi services. The San
Francisco Examiner reports,
“Kate Toran, director of taxis for San
Francisco’s transportation authority, revealed
that average monthly trips per city taxi have
plummeted from 1,424 in 2012 to 504 in July
of this year—a drop of almost 65 percent.
Uber added San Francisco taxi service in
October of 2012.”4 (see Figure 1)
Figure 1
Source: Jessica Kwong, "Report Says SF Taxis Suffering
Greatly," The Examiner, September 1, 2014,
http://archives.sfexaminer.com/sanfrancisco/report-says-sf-
taxis-suffering-greatly/Content?oid=2899618, accessed
November 2015.
Uber is stealing riders from taxi services, and now
has four times the revenue than taxi services.
According to Uber’s CEO, Travis Kalanick, the taxi
industry in San Francisco brings in $140 million a
year, which is down 65 percent from its 2012 count
of $215 million. Uber’s revenues in San Francisco are
running at $500 million a year, and Uber’s growth is
0
500
1000
1500
Jan
Mar
May
July
Sep
Nov
Jan
Mar
May
July
Sep
Nov
Jan
Mar
May
July
AverageMonthly Trips per Taxi
# of Trips in Taxi
2012 2013 2014

2. not slowing down. Travis Kalanick continued, stating
that Uber’s San Francisco revenue is at a 200 percent
growth projection and the amount of Uber rides in
San Francisco are increasing by three times.5
The Cause
What is it about Uber that makes it so intriguing for
users, and so demoralizing for taxi services? The
reasons are that Uber has an easier payment
method, shorter wait times, and is less expensive. A
recent study reveals what the most important
aspects are for riders when selecting a
transportation service.6 (see Figure 2) Uber is
succeeding because they are capitalizing on these
areas.
Figure 2
Source: Ellen Huet, "Uber, Lyft Cars Arrive Much Faster Than
Taxis, Study Says," Forbes, September 1, 2014,
http://www.forbes.com/sites/ellenhuet/2014/09/08/uber-lyft-
cars-arrive-faster-than-taxis/, accessed November 2015.
Ease of Payment. The most important aspect for
riders is ease of payment. Taxis require inconvenient
payment methods such as a credit card, debit card,
or cash, and cash is often required for tips. Uber
recognizes this and makes its payments digital. Ryan
Rommann, in his January 2014 Forbes article, states
that a study by Visa shows that Americans are twice
as likely to carry a phone than cash and cards; and
those between 18 and 34 are four times as likely.7
This study demonstrates society’s movement from
card and cash payments to digital payments. When
signing up to use Uber, riders enter their credit or
debit card information, and after each ride the app
automatically pulls the payment from the account
that is entered. With the use of the Uber app, riders
are able to complete the entire journey by the touch
of their mobile screen, from summoning a driver to
making effortless and cashless payments.
Wait time. A study conducted in 2015, shows that
the average wait time to flag down a cab is 10
minutes, and 50 percent of those flagging down a
cab don’t have a cab driver arrive.8 According to
Uber, the average wait time for Uber users is 2-3
minutes, and the drivers show up 100 percent of the
time.9
Less Money. Not only does Uber have easier
payments, less wait time, and is more reliable, but it
is also less expensive. Uber states that the cost to
use Uber in San Francisco is 30 percent cheaper than
a taxi service.10 According to numbeo.com, a 1.5 mile
taxi ride costs $11.07.11 To use Uber for the same
distance costs $7.00. Because Uber is easier, quicker,
and cheaper, it’s evident why more riders are
switching over from conventional taxi services.
As technology and innovation advance, industries
must adapt in order to stay competitive. Uber
understands this and is pouncing on the unmet
opportunity that has been neglected for years. Uber
is stirring the storm, and if taxi services don’t make
changes, Uber could potentially leave the taxi
services in the transportation dark ages.
5%
2%
6%
10%
12%
16%
18%
21%
21%
30%
30%
35%
Other
Could not get taxi
No public transit option
Cost
Comfort/safety
Reliable
Don't need to park
Didn't want to drive after…
Easy to call car
Fastest way to get there
Short wait time
Ease of Payment
Responses to "Whatare the two
mostimportant aspects when
choosing a transportation option?"
% of Respondents

3. 1 John Remple, "A Review of Uber, the Growing Alternative to
Traditional Taxi Service,"AFB WorldAccess, June 1, 2014.
2 United States Consensus Bureau, "State and County Quick
Facts," http://www.bayareacensus.ca.gov/bayarea.htm,
accessed November 2015.
3 CBS Company, "10 Most Expensive Cities in America,"
http://www.cbsnews.com/pictures/10-most-expensive-cities-
in-america/,accessed November 2015.
4 Jessica Kwong, "Report Says SF Taxis SufferingGreatly," The
Examiner, September 1, 2014,
http://archives.sfexaminer.com/sanfrancisco/report-says-sf-
taxis-suffering-greatly/Content?oid=2899618,accessed
November 2015.
5 Henry Blodget, "Uber CEO Reveals Mind-BogglingNew
Statistic ThatSkeptics Will Hate,"Business Insider, January 19,
2015,http://www.businessinsider.com/uber-revenue-san-
francisco-2015-1,accessed November 2015.
6 Ellen Huet, "Uber, Lyft Cars ArriveMuch Faster Than Taxis,
Study Says,"Forbes, September 1, 2014,
http://www.forbes.com/sites/ellenhuet/2014/09/08/uber-lyft-
cars-arrive-faster-than-taxis/,accessed November 2015.
7
Ryan Rommann, "Cash Is Trash:The Future of Mobile
Payment," Forbes, January 23, 2014,
http://www.forbes.com/sites/techonomy/2014/01/23/cash-is-
trash-the-future-of-mobile-payment/, accessed November
2015.
8 Huet, “Uber, Lyft Cars ArriveMuch Faster Than Taxis,Study
Says.”
9 Uber Company, "Five Years In, A Closer Look at Uber’s Impact
in San Francisco,"
https://newsroom.uber.com/2015/06/uscm/, accessed
November 2015.
10 Ibid.
11 Numbeo Company, "Taxi Fares in San Francisco,California,"
http://www.numbeo.com/taxi-
fare/city_result.jsp?country=United+States&city=San+Francisc
o%2C+CA, accessed November 2015.