UberPool, Lyft Line, and Via want New Yorkers to carpool. Crazy?

Carpooling Sucks. Can Uber Convince New Yorkers to Do It Anyway?

Carpooling Sucks. Can Uber Convince New Yorkers to Do It Anyway?

Moneybox
Commentary about business and finance.
Nov. 24 2015 5:30 AM

Room for One More?

Carpooling can be awkward and irritating. Uber and its competitors want New York to try it anyway.

UBER NYC
Would you share this Uber ride? (Above: An Uber driver looks out of his vehicle near City Hall in New York, June 30, 2015.)

Photo by Eduardo Munoz/Reuters

Julie laughs nervously from the back seat. “This is definitely cutting it close,” she says. It’s late October, a little after 6 a.m. on a Sunday, and we’re driving along Brooklyn’s Atlantic Avenue in an UberPool toward John F. Kennedy International Airport. UberPool—the latest incarnation of Uber in New York City—works by finding users who are headed on similar routes and matching them up in cars that make multiple pickups and drop-offs. The service launched in New York last December and is also online in three other cities, but only started gaining traction here a few months ago, after Uber began advertising it heavily and promised UberPool riders steep fare cuts.

Alison Griswold Alison Griswold

Alison Griswold is a Slate staff writer covering business and economics.

But back to Julie for a moment. This is her first UberPool and my second, and, well, everyone is stressed. A producer’s assistant from Los Angeles, she’s trying to make a 7 a.m. flight. She hopped in the Uber in Brooklyn’s Crown Heights neighborhood at 5:45 and was en route to the airport when another hail—mine—came in. John, our driver, is contrite. He tells us that on Uber’s system, he only sees the pickup location for a rider after accepting the request. He worries that declining too many requests could prompt Uber to lower his rating. I feel terrible for potentially derailing Julie’s travel plans and apologize for being assigned to her trip. We pull up to Terminal 4 at 6:30 on the dot. Julie bolts.

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For now, app-powered carpooling is kind of messy. That hasn’t stopped Uber from thinking it could be huge.

UberPool is one of a few carpooling services trying to carve out space in the New York market. There’s Lyft Line, from Uber’s biggest domestic competitor, and Via, a rideshare designed for Manhattan commuters. In many ways, the city is a natural fit for these operations. Ride-hailing operations tend to rely on what the tech and venture capital types describe as “network effects”—the principle that the more people use something, the more valuable it becomes. It makes sense: As more people book rides on UberPool, Uber’s algorithm has more options for matching requests and is more likely to offer a good solution. Ditto Lyft and Via. New York is dense and populous, so it has the potential to offer a tremendous amount of market liquidity. For ride-hailing services in general—but particularly for carpooling efforts—that’s essential.

In the six years since Uber got its start, the company and its competitors have become nearly synonymous with the term ridesharing. But only in the last year have Uber and Lyft actually begun offering rides that can accurately be described as “shared.” Products like UberPool mark an important volley in ride-hailing companies’ campaign to reshape urban transit. In cities across the globe, on-demand ride services have already made the days of waiting on a rainy street corner to flag a cab all but obsolete. Taxi industries across America are in disarray. In New York, yellow cabs are so desperate that last week they filed yet another lawsuit against the city and its regulators, this one for “deliberate evisceration of medallion taxicab hail exclusivity.” Ride-hailing, which started out with luxury sedan services like UberBlack before conquering cheaper price points with the more democratic UberX, has been transformative. But offering efficient, affordable, app-enabled carpooling, especially in cities where public transit systems are straining? That could complete the goal of Uber and its ilk to offer a top-to-bottom private transit network.

New York has tried getting people to share cabs before, with mixed results. The most famous effort took place on the Upper East Side, and started not with city officials but with residents. In the mid-1980s, the New York City Taxi and Limousine Commission observed that East Siders were regularly organizing group rides from their neighborhood down to Wall Street. In 1986, the TLC launched a pilot program to create formal taxi stands at two intersections along York Avenue: at 79th and 72nd streets. “It started because people couldn’t get cabs on the East Side,” says Matthew Daus, who served as commissioner and chairman of the TLC from 2001 to 2010 and now leads the transportation practice at law firm Windels Marx. “The cabs would come over the 59th Street Bridge mostly, and cabs that came north of that would end up on the West Side of Manhattan.”

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The golden age for city-organized ridesharing arrived in the early 2000s, as transit workers threatened to strike and local officials fashioned contingency plans. In December 2002, then-Mayor Michael Bloomberg debuted a plan that would have taxi drivers stop at specific zones to pick up passengers and encourage riders to share their back seats. The city averted the strike that year; when one eventually did take place in late 2005, the contingency measures looked much the same. New York authorized “car pool staging areas” and permitted all for-hire vehicles—not just yellow cabs—to take street hails. “It was really one of few times, I can count them on one hand, where all the editorial boards of all the major dailies in New York supported something the TLC did,” Daus says. “Everybody thought it was great, that it worked so well to get people through the strike, that they opined that it should remain permanent.”

That proved much tougher. In 2009, the TLC designated a series of taxi stands that could be used as group pickup spots during the morning rush hour, in what the New York Times dubbed “an unusual social experiment for New Yorkers used to treating their cab as their castle.” “I knew right away that the stands that were being set up in well-trafficked areas were not going to work,” Daus tells me. “It’s a chicken-and-egg thing. New Yorkers want to go somewhere real quick, they don’t want to wait two seconds for another passenger, and the cab drivers don’t want to wait—time is money.” The experiment made clear that while the desire for carpooling was there, the logistics could be prohibitive. “A lot of New Yorkers, even if they did want to share, they were in a hurry and they couldn’t wait,” Daus says.

This is the inherent contradiction of ridesharing: The situations it’s supposedly best for—easy commuting! traveling to the airport!—are also the ones in which an unexpected detour is most likely to screw you over. See: Julie on the way to the airport. (I later learned that she had made her flight, “probably like with five minutes on the clock.”) And so the biggest challenge for carpooling services is algorithmic: How long are New Yorkers willing to wait to save a few bucks? How far out of their way will they tolerate a driver going before they become irritated? But there are also problems an algorithm can’t solve: How much patience will New Yorkers have for the random people they’re being asked to ride with? How should each passenger behave?

Perhaps anticipating these questions, Uber published a Pool “etiquette guide” when the service first launched in December 2014. The illustrated list offered tips on how to behave (“best to keep all cell phone conversations to a minimum”), how to make small talk with your UberPool-mate (“consider chatting about the weather or your favorite sandwich, but perhaps avoid any heated political debate”), and, in something of a logical fallacy, when to use the service in the first place (“rides to the gym—UberPool. Rides home after you’ve been working out and sweating for an hour—you may want your own car”).

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To entice riders into shared vehicles, Uber, Lyft, and Via have all promised big savings. Uber currently advertises Pool as a fixed-rate ride that’s at least 25 percent cheaper than UberX, its lowest-cost private-car option. Lyft, for much of November, was doing its rides for 50 percent off. Via, which operates everywhere south of 110th Street in Manhattan, prices all its rides at a flat rate of $5 or $7, plus tax. Even so, the services have struggled to get off the ground. Via only offers shared rides and so has a high match rate—60 percent are shared between three or more people. Still, the company’s ridership is relatively small, with around 80,000 trips a week. Uber recently released data claiming that nearly 50,000 people booked and received ride matches through Pool during the last week of October in New York. That was more than double the weekly amount from two months ago but still a small fraction of the roughly 1 million rides Uber facilitates in the city each week and the 2.8 million weekly trips, as of October, done by yellow cabs. Uber declined to break out what percentage of Pool requests it successfully matches. But perhaps tellingly, most of the UberPools and Lyft Lines I’ve taken in New York have been solo rides. That means I paid the lower rate for what was essentially an UberX.

It’s enough to make you wonder whether there’s something in the DNA of New York that is fundamentally opposed to ridesharing. Public transit is robust here. Time is short. People are notoriously surly. Does the average New Yorker really want to give up a private back seat and share a ride with strangers instead? “There’s absolutely also a cultural component,” says David Yassky, who succeeded Daus as the city’s taxi commissioner and has also advised Lyft. “People do like their space. Part of what they’re getting in a taxi is they’re not packed in on the subway.” At the same time, Yassky feels confident that there’s a place in New York for app-enabled carpooling. “I have zero doubt that there’s a healthy segment of people who would take advantage of carpooling if it was doable,” he says.

Uber, not surprisingly, leans toward the latter view. “I mean I kind of, I reject the premise a little bit of that,” says Josh Mohrer, Uber’s general manager for the state and a native New Yorker, when I ask if the city’s riders really want to share. “People ride the subway touching, and I think that that’s just a New York way of being.” True, but most people know taking the subway involves smashing up against others humans; it’s not something they expect from an Uber or a taxi. “So, I think there’s a paradigm shift that has to happen, but I don’t think it’s impossible,” Mohrer says. “It’s definitely challenging. I think the money piece can be convincing. If we can get the price down significantly on an Uber ride, I think that is convincing enough—that’s ultimately where the value is.”

Maybe he’s right, and getting New York to come around to ridesharing will be as simple as ironing out the technology. If so, the companies—and Uber in particular—are well-positioned. Uber’s, Lyft’s, and Via’s apps can process massive amounts of data to get the right people into the right cars. When a rider requests a Lyft Line during commute hours in San Francisco, “there’s probably about a billion different ways that we can return an answer to you between finding a driver, finding a passenger, and then deciding what order you and the other passengers are going to be returned in,” says Tali Rapaport, the company’s vice president of product. More than 50 percent of Lyft rides in San Francisco are Lyft Lines. This, again, is why network effects are so important. The more people that take Lyft Line or UberPool or Via, the more data the companies have to process, to examine, to hone. The more ridesharing permutations they can crunch, the more likely they are to provide you with a cheap, convenient option. And the better the odds are that you’ll take it.

Uber New York, for its part, is bullish. Pool isn’t perfect yet, but it’s improving. Thirty five percent of Pool trips are happening on weekends, and 17 percent, and growing, are taking place during commuting hours. The company is also fiddling with a feature that will let riders save additional money by walking to specific pickup points in order to expedite trips in Manhattan. Looking at the numbers, it’s no surprise that Uber is confident. Sure, Pool is currently just a tiny fraction of the company’s weekly trips, but Uber’s user base in New York is huge and expanding to the tune of 30,000 new riders a week.

“I think the UberPool thing is very powerful and can be very good for us,” Mohrer told me when I came by the company’s New York office in September.

“If you could make UberPool work in New York, you could make it work anywhere,” added Matt Wing, a company spokesman who was sitting with us.

“It’s from the song!”