Research Summary for Business & Policy

Insights from the past (2011-2015)

• Policy: At the outset of the ridesharing revolution, there was scant policy that held companies accountable. Because these companies' statuses wavered between tech company and transportation company, they were able to utilize that blurry line to establish a fast-moving, competitive business landscape with almost no rules.

• Brand: Uber, in particular, deployed aggressive and tone-deaf marketing strategies to hinder the growth of competitors during its first 5 years in NYC. For example, in 2013 Uber general manager Josh Moher and his team were caught ordering and canceling thousands of rides to sabotage Gett and Lyft when drivers were striking to protest poor wages.

• Business: Uber & Lyft are the pioneers of the "on-demand economy" and there is no denying that their innovative business models and offerings are an order of magnitude better than the existing NYC transit system. Their business models have turned out to be so successful and popular that they have fueled a new startup economy, The "on-demand economy".

• Business: We studied the similarities and differences between 3 main companies for our analysis: Uber, Lyft, and Via. Uber and Lyft are private services that take passengers between two spots, while Via takes multiple passengers heading in the same direction and books them into a shared vehicle. . Think of Via as a bus that’s smart enough to come when you want it and where you want it.

Insights from the present (2016-2021)

• Policy: The need for hyper-efficiency has contributed to irresponsible ride sharing practices — due to an expectation for things to happen quickly, companies do everything in their power to collect more data from consumers (often without their knowledge or willing consent) so they can serve them more efficiently and stay on top of the market.

• Policy: The push to recognize drivers as employees fails due to aggressive lobbying and mixed opinions amongst contractors.

• Policy: Signals of private ridesharing companies and cities partnering begin to emerge

• Brand: Uber and Lyft prioritized safety in their marketing campaigns & made many changes to their platform to communicate information about their alternative services.

• Business: Prior to COVID, leaders like Uber and Lyft developed rental services in an attempt to broaden their driver acquisition pool. In the years that followed, an entire ridesharing rental industry emerged. Covid is the catalyst that exacerbated limitations in the dominant ride-sharing business model. The long-term effects of COVID likely include a newfound paranoia around being in close proximity with strangers — which is central to Uber and Lyft's businesses.

Insights for the future (2021 - beyond)

• Policy: Tech and data is everywhere, and there’s no use fighting it. The solution is not to continue blaming tech-driven transit companies for past mistakes, but ideally to have them work closely with local governments to see if there are any gaps that they can fill. Examples can be providing a streamlined data platform for cities to more efficiently track their transit systems.

• Policy: In order for this to happen, we need to overcome current blockers of healthy government/corporate relationships, which often stem from distrust of both sides (of the perceived incompetency of the government and corruptness of corporations)

• Business: Uber's self-driving cars are key to its path to profitability. It plans to launch its self-driving cars in pockets of cities where weather, demand and other conditions are most favorable.

Uber & Lyft Strategy: Past vs. Future

Uber & Lyft are asset-light companies that monopolized the ridesharing value chain by aggregating and controlling demand

Past Strategy

• Leveraged personal vehicles > avoided capital investments in fleets

• Contracted drivers > avoided employment responsibilities

• Bypassed regulations > avoided costs (i.e. medallions, driver licenses, airport fees)

• Delivered a vastly superior user experience

Future Strategy

• Diversifying into the simplest possible adjacent services (i.e. bikes and scooters)

• Partnering with car-sharing operators & investing in autonomous vehicle development

• Partnering with cities to make their platforms fully multi-modal -- supporting public transportation & civic management

• Exploring alternative revenue streams (i.e. food delivery)

Value Chain & Ridesharing Use Cases

Urban Congestion

New mobility options like ridesharing don't improve the performance of mobility ecosystems, they increase traffic congestion

The answer to urban transport problems was supposed to be on-demand, shared mobility solutions. But the fragmented private-sector-led approach has failed to decrease private car ownership & reduce traffic congestion. Why?

• Ridesharing is overpriced: It's priced at a level well above traditional modes of public transportation

• Use cases are too limited: Ridesharing provides greater consumer choice but does not fundamentally change the mobility landscape

• New modes cannibalize public transportation: Ridesharing mainly relocates riders from public transportation to city roads, adding to congestion

Unreliable Public Transit

Public transit networks often struggle to provide dependable access for all users, especially in economically depressed areas

Fixed-route transit services have not kept up with consumer preferences or been responsive to shifts in perception of value. As a result, members of economically depressed communities lack affordable and convenient access to jobs, healthcare, education, and other opportunities

• "Commuting to work by bus can take up to 1 hour for just a 4-5 mile commute"

• "Public transit riders in major US urban areas spend nearly 1/3 of their commute time waiting for public transit"

COVID-19

COVID 19 has exacerbated issues with ridesharing and public transit service models, leading to revised future priorities

Ridesharing future priorities:

• Zero in on stabilizing income efforts by catering to alternative customers (i.e. food delivery, front-line workers)

• Alternative pricing models to attract new customers

• Making a greater effort to partner with cities to offer cooperative arrangements (i.e. integrating with public transit, first-and-last-mile micro-mobility solutions)

City future priorities:

• Accommodate a higher volume of passengers more safely by offering more modes of transportation

• Tailoring service frequency to actual demand patterns

• Maintaining sanitizing practices to build public trust

Driver Employment Status

The contractor v.s. employee debate picked up steam with California's Prop 22, but ultimately nothing changed due to mixed opinions and aggressive lobbying

Why the debate?

• There is clear evidence that app-based companies' business models rely on undercutting the labor rights of their workforce

• Ridesharing drivers do not have access to health or car insurance, paid sick/family leave, or workers compensation

• Despite the lack of benefits and a secure living wage, a segment of drivers do enjoy the freedom and flexibility contracting provides

Data Aggregation

Consumer demand for hyper-efficiency & provider's desire to improve asset utilization has pushed services to collect rider data by any means necessary

Access to traditional and untraditional data sources is the key to optimizing asset utilization, and more importantly, winning public-sector business. Consumer privacy will become increasingly important as Lyft & Uber's relationships with city/state governments grow.

Demand Response Platform for Public Transit

To unclog congested roads, improve safety, and reduce carbon emissions, cities should align themselves to demand-oriented transportation systems by:

• Partnering with private-sector to develop a more robust transportation service that caters to consumer preferences and leverages existing infrastructure

• Utilizing comprehensive data sources to better understand consumer behavior

Current Examples:

• Berlin x Traffi: Single multi-modal mobility platform

• NYC Public Schools x Via: Dynamic routing & parent app

Transforming Ridesharing from a Luxury good into a Utility

Ridesharing companies need to address the price sensitivity to their offerings, which excludes a considerable population of commuters. To support alternative markets -- economically depressed communities, essential workers -- the price of core ridesharing products needs to be lowered without sacrificing consumer needs.

Areas to Explore:

• A service that targets essential & economically depressed areas

• Establish a self-sufficient local ridesharing service that develops a local labor market (requires network efficiency)

First & Last Mile Micro-transit

A tech-enabled, on-demand mini-bus/van/shuttle service that serves as a complement to traditional fixed-route public transportation in economically depressed areas. The goal of the service would be to provide affordable and reliable access to all members of a community

Supporting Ecosystem

Developing a service that supports the areas 'weaker areas' of the ridesharing value chain

Areas to Explore:

• Car technology

• Fleet management

• Urban integration

• Driver employee benefits

Public x Private Partnerships

In general, a pattern emerging amongst new ridesharing initiatives is to reform, integrate and streamline existing public transportation services with data and better technology.

Current Examples:

• Uber Bus x Cairo: Cost-effective transportation options where public transportation is inadequate

• Summit NJ Uber Subsidy: To reduce parking lot overcrowding, owners of parking permits receive free uber rides to the train station

The Future We're Designing For: A Unified, Multi-Modal Transporation Systems

The Key to solving the urban mobility challenge is to imagine a city's transportation network as an ecosystem that has an orchestrator at its center. The orchestrator will identify the optimal mix of different mobility modes, creating an overarching vision, and set KPIs (i.e. travel times, emissions, safety levels) through an integrated mobility management system.

Future Consumer Experience - A Single Transporation Interface

Book a customized trip involving multiple modes through a single interface, with the most efficient journey possible designed on the basis of data from the integrated mobility management systems

Opportunities

• Public Transport & Ridesharing Cross-Modal Bundling: Enabling users to change seamlessly between transport modes in a single trip

• Enhanced Traffic Management: Optimize the flow of traffic on city roads, reducing congestion and shortening travel time

• Seamless Connectivity: Consumers will be able to spend their travel time more productively and operators could maximize the use of their assets

• Cross-Modal Optimization: Ability to balance demand and supply across mobility assets

Unified Urban Mobility System Frameworks

Data Aggregation

We believe that a streamlined data-aggregation solution will solve the incomplete picture that cities have of their transit systems and will be valuable for cities and corporations to work together when trying to provide more on-demand, affordable transportation options.

Why

The fragmented private sector-led approach has failed to decrease private car ownership & reduce traffic congestion. Cities are in desperate need of traditional and untraditional data sources to power accessible, dependable, and affordable transit solutions.

• More efficient asset and infrastructure utilization

• Fewer resources to satisfy mobility demands

• Less congestion

Components of Solution

Turn-key demand software

On-demand cross-modal bundling platform for public transit.

Cloud architecture

Public sector cloud framework to support mobility data collection and predictive analytics.

Micro-Transit

We believe a local, first-mile/last-mile micro-transit solution will provide a reliable, convenient & affordable mobility solution for commuters in economically depressed neighborhoods.

Why

On-demand mobility is now the expectation. Fixed-route, public transit services have not kept up with consumer preferences, and cities are seeking modes of transportation that are:

• Tailored to actual demand patterns

• Offering more modes of transportation

• Accommodating a higher volume of passengers

Components of Solution

Pricing model

Dynamic pricing or subscription options that align with essential worker needs

Vehicle experience

Experience designed for the new normal that aligns with expectations of consumers.

Organization design

Localized, company infrastructure that enables driver career growth & upskilling.

We used the Transition Design Spatio-Temporal matrix as a lens for conducting our desk research in order to understand the past, present, and future of ridesharing. To simplify the process further, we used the three leading ridesharing brands in NYC — Uber, Lyft, Via — as a proxy for examining ridesharing business/policy practices, government interventions, and their effect on everyday life.

Summary Slide Deck:

An in-depth overview of business insights, friction themes ,and opportunities

Link to presentation