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Uber and Lyft had it pretty good in the beginning. The companies could roll out their services to new cities, entice a bunch of drivers and riders to their platform, and "disrupt" transit before regulators were able to stop them. It was a playbook that worked for a while, until the people who made the rules started to catch up. Now, city officials and regulators have been less than enthusiastic when new transportation startups start to move in. In many ways, rideshare companies have made life difficult for the scooter companies trying to follow in their path.
This week on Gadget Lab, WIRED transportation writer Aarian Marshall joins us to talk about the future of Uber and Lyft, and whether all those micromobility startups will be able to keep scooting along.
Read Aarian’s story about how ride-hail companies have made life difficult for scooter startups here. Read more about California’s Assembly Bill 5 here. Read more about Prop 22 here. Also, follow all of WIRED’s coverage of scooters and the gig economy.
Aarian recommends starting a regular yoga practice, and investing in some yoga blocks. Mike recomments A Year With Swollen Appendices by Brian Eno, which has just been re-released in a 25th anniversary edition. Lauren recommends the Sway podcast from The New York Times, hosted by Kara Swisher.
Aarian Marshall can be found on Twitter @AarianMarshall. Lauren Goode is @LaurenGoode. Michael Calore is @snackfight. Bling the main hotline at @GadgetLab. The show is produced by Boone Ashworth (@booneashworth). Our theme music is by Solar Keys.
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Lauren Goode: Mike.
Michael Calore: Lauren.
LG: Mike, when's the last time you took an Uber?
MC: About two weeks ago to go to a doctor's appointment across town.
LG: What was it like? Was there plexiglass? Did you bring a face shield?
MC: There was plexiglass and other than that, it was normal. It was nice.
LG: Normal. What is normal anymore? All right, I guess we're going to try to figure that out on today's show.
[Gadget Lab intro theme music]
LG: Hi, everyone. Welcome to Gadget Lab. I'm Lauren Goode. I'm a senior writer at WIRED and I'm joined remotely by my cohost, WIRED senior editor Michael Calore. Hey, Mike.
MC: Aloha.
LG: How are you doing today?
MC: I'm doing great, thanks.
LG: Good, good. We're also joined by WIRED transportation writer, Aarian Marshall, who's joining us from DC. Aarian, thanks so much for coming on Gadget Lab.
Aarian Marshall: Thanks for having me. It's so good to be with coworkers for a moment.
MC: It's good to see you on the postage stamp.
LG: It's good to see you on Zoom. Today, we're talking about how we got around this year. I mean, not that we were able to get around to this year because that would have been nice, but how we actually moved from place to place and how ride-sharing services like Uber and Lyft and even scooter shares were effected by both the pandemic and legislation.
Just nine or 10 months ago, it was nearly impossible to imagine modern transportation without Uber. But when the pandemic hit, it devastated demand for ride shares. Meanwhile, in California, legislation like Assembly Bill 5 and the recently passed Prop 22 are likely to have big repercussions for gig workers, the people who actually drive for these companies. The laws will probably set a precedent for how the companies that rely on these workers do business. Aarian, you cover these companies closely. How are they fairing?
AM: They are not doing great, probably not surprisingly. Uber and Lyft notoriously debuted on the stock market last spring. It was like one of the big first tech IPOs of the modern sort of unicorn era. Since then, their stock prices have kind of struggled and they've struggled to actually make money. There are still lots of people pouring money into these companies, but they're still not really turning a profit and they're certainly not turning a profit this year.
Rides are still down in most places across the world. In the US, at one point they were down 75, 80 percent. We've heard more recently that rides are kind of coming back in some places and some cities, but I think like the coronavirus itself, there have been waves of people going out and about, then things shutting back down again. So they're not doing great. It's been a hard year for everyone, and that includes Uber and Lyft.
MC: Right before the pandemic, they made some changes to their businesses. Both of them shed parts of their business that they didn't want to deal with anymore and they made some acquisitions and moved into some new areas. How has that decision-making played out?
AM: That is a great question. I think it sort of depends on which things you're talking about. Uber notoriously pulled out of some places around the world. They pulled out of Asia, sold part of their business to other companies over there. That's kind of... Was part of them consolidating, rearing up for this Wall Street IPO.
The other big thing that both Uber and Lyft moved into in the last few years are scooters and bikes and sharing those things instead of just car rides. That has also proven to be a difficult business. It's actually doing a little bit better during the pandemic. It turns out that people are getting super into biking these days. It feels a lot safer to some people. We'll see whether those trends will keep up during the winter. I think it's going to be really hard for people to get around in places where it gets really cold and snowy and unpleasant to be on a bike or scooter.
But those businesses in general are doing pretty well. That said, Uber sold its scooter and bike unit over the summer so I think those two are complicated businesses. Something else that Uber has gotten into, and Lyft signaled that it might get into soon, is food delivery. Uber Eats is now one of the big food delivery businesses in the country. It's doing crazy business right now, doing really, really well, but it also is not making money. It's kind of a trend here. There are a lot of people using these services. They're become verbs. People Uber like they use Kleenex. It's a brand name that's become something that we all use every day, but they still don't make money.
LG: So even in a non-pandemic world or a post-pandemic world, what would these companies have to do to actually become profitable?
AM: That's a very good question. If I knew the answer to that one, I'd be making so much money. But I think it's just kind of finding ways to make their services more efficient. One of the big theses that was put out at the beginning of these companies is that it would actually just come down to a monopoly. The way that you end up making money in ride hail is you keep pulling down your prices because you have so much venture capital funding and you just basically starve out your competitors. And then eventually, once you don't have any competitors, you can start raising prices and maybe make a profit.
It's starting to look like that's not really going to happen. Lyft is sticking around. It's still doing well. Uber's still powerful. They both are continuing to be here. So I think that it's kind of an open question, but they're still sort of finding ways to trim the fat in terms of running a business. That's something they're working on every day.
A big part of both companies' businesses is trying to find ways to direct drivers to kind of be more efficient, productive workers even as they're arguing, at the same time, that drivers are just independent contractors and not employees. So it's an interesting sort of line they're trying to walk here.
MC: Weirdly, the government is helping them trim the fat, it seems. The two pieces of legislation that we talked about at the top of the show that Lauren mentioned, State Assembly Bill 5 and Prop 22 ... Prop 22, which passed last month here in California, says that Uber and Lyft and other companies like them don't have to consider the people who do the actual driving or the actual delivering employees. That's obviously going to work out in favor for the ride-sharing companies and other companies that run gig worker payrolls. My question is that's just California. Has that legislation set any sort of precedent that could see types of laws like this getting set in other states or at a national level that could end up being a financial boon for these companies?
AM: Yeah, definitely. Immediately after Prop 22 passed on election day, you saw John Zimmer the CEO of Lyft come out the very next day and say, "This is going to be a model that we're going to try to replicate all over the country," and then the CEO of Uber very soon after said the same thing. There's now a specific lobbying group that companies like Uber, Lyft, DoorDash, all these companies that use gig workers, have created to push this model at different state legislatures, and then there's also some speculation about creating some kind of third way model on a federal level for people who aren't employees and people who are not quite independent contractors either and maybe finding a way to give those kinds of people perhaps more benefits.
The opponents of this model will say that this is a really slippery slope. It's not like you're going to have a lot of people get sort of made into employees from independent contractors. It's mostly going to move the other way. You're going to have people lose protections and lose benefits if we create an option where employers don't have to give people those things. For me, this is kind of the story to watch for 2021, is how do these companies try to replicate this Prop 22 model in other states and maybe even in the federal government.
LG: Aarian, how would you describe Uber and Lyft's treatment of its drivers at this point in time? I mean, earlier we talked about how profitability seems nearly impossible without trimming the fat and making drivers more efficient. But at the same time, we've heard plenty of stories of drivers who are just working these endless shifts and sleeping in their cars in order to get enough rides to make it work for them economically. We know that there are a lot of people working really, really hard for these companies. Broadly speaking, how would you categorize basically how gig workers are valued right now?
AM: The best answer I get to those sorts of questions are from talking to gig workers, and it's so dependent on the person you talk to. I think Uber and Lyft want to position gig work as something that you just kind of casually do, that you pick up and put down when you need a little extra money, that if you have something that you have to do in certain hours, you can do gig work on those off hours.
But, I will also say that it feels like Prop 22 has really lit a fire for those gig workers that really feel abused by these companies. There was something that happened last year where it turned out that DoorDash was using the tips that customers believed they were sending to their Dashers, the people delivering their stuff, that that money was actually being used to subsidize their wage so they weren't getting their full tips, that DoorDash was getting part of their tips.
There are lots of examples of folks... You're working for this company that's essentially... All these companies that are... So much of their process is automated, there's not a lot of people you can actually talk to on the phone if something goes wrong on the job. I talked to a lot of people who are booted off the system, they're deactivated, because a rider made a certain kind of complaint about them and they feel like they have no recourse to defend themselves. They're just like, "You just cut me off from my source of income for no reason and I have no way to defend myself." So it feels sort of impersonal and difficult to work for these companies.
Those people often feel disposable and that's really more recently created lots of reasons for them to organize and for them to say, "Hey, let's start to talk to each other. Let's start to find each other online and figure out how to use the power that we have as workers to at least kind of get a seat at the table with these companies and have a more honest conversation about how we can make this arrangement work better for us."
LG: All right, we're going to take a quick break. When we come back, we're going to talk about how the inroads that companies like Uber and Lyft have made in the transportation sector are affecting the way we look at upstarts. We'll be right back.
[Break]
LG: Welcome back, everyone. All right, let's talk about scooters, the electric kind that you stand on and use to zip down the street. It's generally known as micromobility and it's a big deal in cities. But that doesn't mean it's been a smooth ride for scooter companies because ever since Uber and Lyft disrupted traffic in cities, regulators have been pretty wary of the transit upstarts that have come after them. That means more red tape and longer wait times on permitting and just overall more scrutiny. Basically, cities want to keep scooters from getting free rein the way that Uber did.
Aarian, this week you wrote a story for WIRED.com about all of this. Tell us about the regulations that cities have put in place to deal with companies like Uber and Lyft, and then how that has trickled down to scooter companies.
AM: So part of the problem is actually that when Uber and Lyft came into cities in the beginning of the last decade, lo those many years before, their lobbyists were really smart. In California, they ended up getting regulated by the Public Utilities Commission, which are the people that regulate the electric grid and then over time, they also became the people that regulate things like limousine services and those sorts of transportation stuff. They decided to slot Uber and Lyft in there in the state regulations instead of with the taxi companies which are regulated by the cities.
And then, Uber and Lyft ended up replicating that all over the country, so now there's more than 40 state legislatures that have rules about Uber and Lyft and ride hail that actually preempt cities from creating their own rules about ride hail. That means that if I'm, I don't know, some city and I say, "We don't want Uber and Lyft here," it's going to be really hard for me to make sure that they don't run in my city, even though it's my streets, technically. That's not the case with scooters.
Cities were really frustrated about the fact that they had no control over Uber and Lyft, especially as it became clear that Uber and Lyft were having real effects on the way the cities run. There's some evidence to suggest that they're pulling people off of public transit, which we all know is always really underfunded. It creates more traffic. There was a study out of San Francisco a few years ago that found that that Uber and Lyft had, I think, more than doubled their downtown traffic during peak hours. So it's creating this crazy traffic in San Francisco, but they can't do anything about it.
Now, when the scooter companies come in, they are run by a lot of the same people. There is a lot of ex ride hail people at these companies. They're venture funded. They're coming out of California. The difference is that cities have control over their sidewalks. So they thought, "Well, we can't have this same situation happen again. We have to take more control here." So they've created way more stringent regulations for scooters and for bike share than they ever have for ride hail. That's something that if you talk to the people that run scooter and bike companies, they're a little frustrated about.
MC: I mean, they have reason to be frustrated, right? It's obviously bad for their bottom line. But what was the effect for us, the people who use the scooters and the bikes?
AM: I think it's made it a little harder to depend on scooters and bikes. In an ideal world, I'd wake up one morning and say, "Hey, I'm selling my car. It creates lots of emissions. It creates traffic. I want to be part of the solution and not part of the problem. I'm going to depend on bike share or scooter share to get to work or the bar, wherever. Wherever I'm going. Not back from the bar, but to the bar."
MC: Uh-huh.
AM: Stay safe, kids. But to depend on that service, I have to know that it's going to be around all the time. Something that's a lot of cities did when these scooters came in, is they said, "Oh, we don't know what's going on. We want to study this. We don't really get how these services work. We're actually going to limit the number of scooters and bikes that can be in our city, and we're going to say that they can only be in specific kinds of areas."
What that means for me as someone who's trying to drive less often is that I don't always know that I'm going to be able to find a scooter nearby because they could be anywhere and there's only so many of them and there's lots of people who want to use them. So I think it makes the services sometimes hard to depend upon, and then it's harder for me to switch from, say, a personal vehicle which I'm in control of where it's going to be and I park it where I want to. I think it's made these feel a little less viable as commuting options.
And then the other result is they have to pay these fees to cities to operate on their sidewalks, and they often pass those prices on to the customers. I've seen, over the past few years, these scooter and bike rides get more and more expensive. So then it also feels less viable as an option. It's like, "My car, I already paid for it. It sort of feels free to me whereas I'd have to pay $5 each way to catch a bike ride and maybe get sweaty along the way. That's no fun," and then it makes it kind of easier for me to default to my old habits.
LG: Is there a future for scooter companies outside of cities? I mean, you're laying out some of the real challenges that... I shouldn't say challenges. Maybe barriers to people using them when they're not super convenient, but are there last mile plans in place for these scooter companies or campuses or any other way they could actually be used and be effective?
AM: Yeah. There are big bike share systems in cities like New York; where I am in Washington, DC. Bay Area has a bike share system. Those are actually all owned by Lyft and those do really well. People love using them and they're pretty dependable. So I think there are a lot of cities where this is working out. There are some places where... I just was reading that South Tahoe is having a lot of success with scooters, for whatever reason.
LG: Really?
AM: Yeah. I think it's like a fun thing for a tourist to do. You go and can just cruise around on your scooter.
LG: Just use it as a sled going down the mountain during the winter.
AM: Sounds safe. Universities are ... Actually Spin, which is now owned by Ford, that's been a big part of their strategy, is they've signed up a ton of campuses. It's great to be on campuses because you get the kids into scooters early and then it's like a lifelong habit and they'll use them when they move to San Francisco to begin their career.
So yes, I think there's a lot of opportunities for scooters and a lot of places where they can be successful and a lot of places where they had been successful. That said, those companies maybe aren't really making money yet, either. Lime recently said it's approaching profitability, but I've heard from some people that they sort of doubt that. They haven't really revealed their financials yet. So maybe not making money yet, but it could be that they will do so in the future. For folks like me that just kind of want to ride a bike around or a scooter around, that's good news. It could work out in some places.
MC: Aarian, here in San Francisco and in other big cities, it feels like the scooter thing kind of hit a peak at the end of 2018-ish. Now, it's about two years later and scooters seem to be less prevalent. I don't see them that often anymore. Is that actually true or is my brain just now used to seeing them all over the sidewalks so I noticed them less?
AM: I think your brain has just gotten used to them because I've actually added more... I think just late last month they added a thousand new scooters by the company Lime to San Francisco, so they're actually continuing to expand the program. It could be these companies get a little bit strategic about where they're putting their scooters, so it could just be that they've discovered that wherever Mike is, is a bad place for scooters.
But they're still there in San Francisco and they're still there in a lot of cities and I think you're right. They're just kind of blending into the landscape. It felt like when they first got here, a lot of the companies just really sort of flooded the zone, especially before there were regulations and put... I remember being in San Diego at some point and there being like 40 scooters on a street corner. They're just all like sitting there, jumbled up. It doesn't feel like that anymore, but they're still around.
LG: One last question. Quickly, when's the last time either of you went for a scooter ride?
AM: It's been like a year and a half. Scooters scare me, man. I like what they're doing. All power to them, but I am not coordinated enough and I will die.
LG: I think the last time I took a ride was probably WWDC 2019, so yeah.
MC: I own a bike and I usually use that to get around, but the scooter that I rode last was about a month ago. It was a friend's privately owned scooter. It was not a rented scooter.
LG: Did you pay your friend? Were you like, "Hey, here are the two bucks I would normally pay to Jump," or something like that?
MC: I did not. He gets to keep being my friend.
LG: Bird or... I don't know. All of the different scooters. That's true. That's his reward. All right, let's take a quick break and then we'll come back with our recommendations.
[Break]
LG: All right. Aarian, our guest of honor, what is your recommendation this week?
AM: Well, I feel like they come out here every time and say something super non-WIRED. I will continue that by saying that I've made it to 2000 and I'm finally starting to do yoga, which I'm very neurotic and I haven't liked it before. But in the safety of my tiny apartment, I've sort of gotten into... And I recently just got these yoga blocks just off Amazon and they're good, man. They make me feel like less of a loser.
LG: That's cool. Are they corkscrew? Foam? How would you describe them?
AM: They're foam. They're very basic, but I'm finding it sort of... And especially because we're all working by ourselves now from the isolation of our home, I can, like every two hours, just kind of stretch for 10 minutes. I'm finding it's a great way to sort of give my day structure and ground myself. I'm really-
LG: Oh, you're in it.
AM: Yeah. I'm changing my mind. I'm changing my outlook. I'm different now with my yoga blocks.
MC: Namaste.
LG: I just realized I asked you if they were corkscrew or foam so clearly, that's where my mind is at these days. I meant cork, but I think you all got that. But that's a great recommendation, Aarian, so thank you for sharing it. Everyone could use a little yoga these days. Mike, what's your recommendation?
MC: I want to recommend this book. It's by Brian Eno. If you're not familiar, Brian Eno is a musician and a record producer and an artist. He does visual art and audio art installations in museums and environments. He's just like this big creative mind and a really influential force in our world that we cover at WIRED.
Anyway, Brian Eno has a new book out this week. It's actually the 25th anniversary edition of his book that came out in the '90s. It's called A Year With Swollen Appendices. It's a diary, mostly. He woke up on the first day of 1995 and said, "Every day this year, I'm going to fill one page in my notebook with the things that I did, the people that I talked to and the things that I'm thinking about."
You read it and he's in the studio with David Bowie and the band James, but he's also talking to his wife and sending telegrams and working on digital paintings and all kinds of wacky stuff. It's like peering into the mind of a digital artist and musician and absolutely fascinating. You're just going to read somebody's diary from 25 years ago? That seems a little weird, but it's actually ... It's like you can't put it down. The entries are short enough where you read them and you're like, "All right, just one more. All right, just one more," and I'm kind of blowing through it. I really love it. It's very inspirational and he's a unique dude. That's my recommendation, Brian Eno, A Year With Swollen Appendices.
LG: That sounds like a nice way to blot out the news of the day.
MC: It is. It really is. What's what's your recommendation?
LG: My recommendation is a podcast. I just took some time off and during that time, I was able to listen to a bunch of other podcasts, which was really nice. I finally had the chance to listen to Kara Swisher's new podcast Sway.
I used to work with Kara Swisher. She hired me for one of my first writing jobs at All Things D back in the day. She was my editor for several years. She was my boss because she is the boss for several years. I consider her a friend and mentor. And now, she has this new podcast through the New York Times called Sway.
I listened to three episodes. One was with the comedian Sarah Cooper, another one was with the economist, Raj Chetty, and then there was this great episode that was "Post-Election Therapy" with Esther Perel. She's got so many great ones. She just published one with Jane Goodall that I haven't had the chance to listen to yet. She's also interviewing the team that has come up with the Pfizer vaccine. I think her first interviews were with Gavin Newsom and Nancy Pelosi, which I haven't had the chance to listen to. There's some pretty heavy hitters on this show and Kara's interview style is unique. I recommend having a listen.
MC: Can you hear her aviators as you're listening?
LG: Oh, absolutely. So fun story is I used to tape a podcast with Kara Swisher for two years. We had one called Too Embarrassed to Ask through Recode. I can tell you that she did in fact show up to our tapings many times in aviators. Keeps you guessing.
All right, that's our show for this week. Thank you so much to Aarian Marshall for joining us. Everyone should go read her story on WIRED.com. Thanks, Aarian.
AM: Thanks for having me.
LG: And thanks, Mike, as always. Nice to see you over the Zoom. And thanks to all of you for listening. If you have feedback, find all of us on Twitter. Just tweet at us. Check the show notes. We'll leave our handles in there. This show is produced by the excellent Boone Ashworth. We'll be back next week. Goodbye for now.
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