Comment by jaysonelliot | Hacker News Reader

Comment by jaysonelliot | Hacker News Reader

Uber's behavior during Sandy was a colossally boneheaded move. Of course they're able to rationalize the 2x "surge pricing" by talking about increase in supply, etc. To a certain subset of the public, it made sense, and they had their defenders in quite a few places.

What it really did, though, was generate massive amounts of bad publicity as journalists took the opportunity to dash off quick "Price Gouging" stories, inflaming the public and giving ammunition to those who would like to take Uber down.

Uber had a golden opportunity during Sandy. They could have dug into their own pockets and paid their drivers the 2x pricing, while keeping the rates as-is, or even giving a Sandy discount. The monetary cost would have been absorbable, and the benefit to their image would have been immense. Instead of regulators pointing to their "price-gouging" during the storm, there would be journalists and riders coming to their defense, talking about what a good thing it was that we had a company like Uber in New York City.

If they failed that simple test of PR101, it's not surprising that Kalanick and his company are having a hard time navigating the insular and heavily political waters of municipal regulatory boards. There's more to succeeding in business than having a great product. You've got to learn to play the game.

They DID dig into their own pockets to pay drivers the 2x price. Their "surge" pricing was in effect for a very short time. It's been reported that they paid over 100k out of pocket to help boost supply. They're a young, inexperienced company, and went with the tool they usually do when they are supply constrained and need more drivers (increase prices to incentivize drivers). They quickly changed course and did the right thing.

Yes - but ONLY after they got slammed in the media about their surge pricing, and were told they may be subject to fines for price gouging.

"They're a young, inexperienced company"

True. But they're also challenging regulations saying they shouldn't have to play by the same rules as everybody else. Here they got burned, and they have no-body to blame but themselves.

Where have they ever said they shouldn't have to play by the same rules as everyone else? They vet their drivers and ensure that all meet the requirements to drive locally. They're using licensed, commercially insured drivers who meet all the regulations for their city. How is that not playing by the same rules as everyone else?

Cab dispatch companies work in all the cities Uber is in, and Uber meets exactly the same regulations those companies do. Should Uber double drug test drivers? Should they double inspect vehicles for emissions? Or are we OK with knowing that all their drivers are already in compliance with all local regulations in each city? I guess I don't see what regulations they're skirting, or why there's a need for more regulation now. There's a considerable difference between what Uber does (provides a way for licensed limo drivers to fill their spare capacity) and what companies like Lyft and Sidecar do (allow anyone to drive without commercial licenses or commercial insurance).

Uber is a young company. I don't think anyone is advocating that they'll do everything perfectly. It's pretty easy to imagine stumbling through some learning experiences like they did their first hour after hurricane Sandy, when they went with the tool they're used to using in similar non-emergency settings. They quickly corrected their actions, and seem to be learning. If they continue to flub future post-emergency responses, then I could see the issue. Until then, I applaud them for learning (or appearing to), and don't fault them for not breaking non-existent regulations (they're following all local regulations in each city, and shouldn't need to ask for permission to run a legal business there). The criticism they face is from people with vested interests in an outdated business model. Those people deserve to be called out.

"How is that not playing by the same rules as everyone else?"

There are a few examples, but one was with tracking their travel with GPS instead of the approved meter that others were required to use:

http://blogs.hbr.org/hbr/mcafee/2012/08/bostons-uber-ruling-...

Uber was banned in Boston for awhile, and eventually the ban was overturned, but the fact remains that they did ignore (intentionally or unintentionally) the existing regulations for metering travel. I'm all for forward-thinking solutions to problems, and personally I think GPS is a better solution - but I grow tired of companies that repeatedly ask for forgiveness rather than permission as their modus-operandi.

The "approved meter that others were required to use" was for taxis, not limo/towncars. Their GPS units are significantly less opaque than the status quo for limos (which really comes down to just naming an arbitrary price, or having to pay for a full hour regardless of use). In the Boston case, a lower level regulator with ties to the taxi industry issued the cease and desist, it was his supervisor who removed it, because there was in-fact a basis for using GPS to track time/distance.

Why should Uber ask for permission to run a legal business? The city of Boston agrees that their business is legal, and that GPS is OK. They're using commercially licensed drivers with commercial insurance, leveraging a system that existed well before Uber. They're simply making it more efficient for both sides (fill spare capacity with riders who need a car). Their drivers and cars meet all local regulations. Their outspoken opponents aren't doing so for the public good, they're doing it because they represent an entrenched power who is threatened. Legal businesses don't have to ask for permission, and shouldn't be asked to.

They could have dug into their own pockets and paid their drivers the 2x pricing,

That would do nothing about demand (spiked because of mass transit closures). Discouraging consumption with price increases is to customers' benefit: it keeps the service available. You have choice of not riding by taxi, or paying twice the price; with a shortage, you have no choice -- you're stuck. (Of course Uber's PR is about the supply side; the demand effect is way too non-PC).

That's the rational argument, and yet, they clapped: http://www.econlib.org/library/Columns/y2007/Mungergouging.h...

People prefer to have a shortage than feeling cheated.

Judging by your essay, they prefer feeling cheated to having a shortage -- it's other people's shortage they don't care much about. They buy the price-"gouged" products, then they support arresting the guy who sold them. They are free to go home empty-handed with their confused ethics intact.

This is a failure of political economics (not market failure). They didn't see the market choice. They thought the choice was political: don't buy, or get the police to make the guy lower his prices. They walk away with nothing.

I don't think that anyone is disagreeing with what you're saying, but you can either go along with the (illogical) positions and choices people have, or try to challenge them. If you try to challenge them you run the risk of backlash.

One could argue that the surge pricing was the more ethical decision as it increased supply, rather than giving a discount which would have constrained supply. Of course, if they were just coming from the self-serving PR angle, they would have said "all rides are free" but not increased driver payments -- it's hard for a lack of supply to be excoriated in the newspapers.

It was unfortunate and bone-headed, but they are good enough to be able to recover.

Uber has a great algorithm to help supply meet demand through variable pricing.

They did forget to account for emergencies.

During the NYC blackouts not long after 9/11, not a single supermarket or corner grocer raised their prices.

I'm sure Uber has learned, and will have a plan in place next tme.

I am concerned about Travis' ability to beat the regulators here. He's taking an us vs. them approach.

May be necessary in reality - in fact, I bet it is.

But I wonder if he can get further by being outwardly less combative/aggressive.

In most cities? No, he can't, as long as he's not willing to charge their prices. He has no leverage past making bad PR for the cities. Being friendly isn't going to get him anywhere with most of these types of regulatory snags.

It's very hard to negotiate with folks when what they want is your death. The compromise is what, exactly? That they only half-kill you for now until the rest of your support base erodes?

He's playing a giant game of chicken, because sometimes that's the only way to hope to win.

But, in the end, as the saying goes "You can always tell who the pioneers are because they have arrows in their back and are lying face down in the dirt."

The most likely outcome is status quo stays status quo, unless Uber can make enough noise/etc to matter.

I think we are being too harsh on Uber. People are not feeling as bad as journalists are making it out to be. It's always fun to go after success especially when the failure happens to be the very differentiation that made it successful. Also Uber's trajectory of growth would not have been remarkably different had it dug in and paid the entire 2X pricing. No one but the Govt can do that when real costs are involved. People will forget about it just like we forget what the financial institutions did in 2008.

To be fair, Uber implements the same "surge pricing" here in Boston on many busy holidays. It's their usual method of responding to increased demand -- not necessarily hurricane-specific price gouging.

This is true, and it isn't just holidays. They usually start surge pricing on weekends after the T (subway for non-Bostonians) shuts down for the evening (around 12:30-1AM) and it continues until demand drops. That being said, if you try to request a pickup during a surge pricing period, there's a pop-up on the app that warns you about it and it gives you the option to cancel. It isn't something they tack on at the end, so surge pricing shouldn't come as a surprise to anybody.

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