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Favourable cabinsAs a spin-off of a municipal college working with a shoelace money, Kutsuplus had no wealthy risk investors behind it. Conversely, "expensive" is everything that is not about. Even if you might be temptated to attribute the low cost of the ministry to its resourcefulness and its overall dimension - is it the Walmart of transportation?
- It is affordable and has a trivial origin: it can allow itself to spend millions to eliminate rivals, be they old-school taxis or start-ups like Kutsuplus. Recent articles in The Information, a technical bulletin site, suggest that Uber fell $1.7 billion in the first three quarter of 2015 while posting $1.2 billion in revenues.
It has so much cash that, at least in some places in the United States, it offers trips at such low prices that they could not even recover the costs of combining petrol and depreciating the vehicles. The gameplay is simple: he wants to keep prices so low that there' s more traffic - by attracting some of the clients who would otherwise have used their own cars or their own local transit.
To achieve this, it is willing to invest a great deal of money and at the same time expand quickly into related sectors, from the foodstuffs industry to packaging supply. It is an apparent but seldom asked question: Whose money is Uber incinerating? Backed by Google, Jeff Bezos of Amazon and Goldman Sachs, Uber is a prime example of a business whose worldwide growth has been made easier by governments' failure to steer the gains of high-tech and finance corporations.
Frankly, the rationale for having so much money is that government is no longer doing it. Consider Apple, which has recently announced that it is sitting on $200bn of potentially controllable overseas currency, or Facebook, which has just posted record gains of $3. 69bn for 2015. In these circumstances, it is no wonder that highly encouraging ministries such as Kutsuplus have to be closed down: Uber would have been lost too, disconnected from the apparently infinite money supplies of Google and Goldman Sachs.
Whilst the prospects of covering the cost of a Uber journey with publicity are still very low, the only way for these companies to amortize their investment is to squeeze even more money or productive out of the Uber riders or ultimately - once all their rivals are out - increase the cost of the journey.
It is already taking higher percentage of its drivers' fare (this figure is said to have risen from 20% to 30%), while it is also trying to directly transfer more cost related to backgrounds and security awareness to its riders (through the so-called charge for secure rides). There is only a single option between more precariousness for the driver and more precariousness for the passenger, who has to pay higher tariffs, with or without contentious practice such as price increases (prices rise when there is high demand).
In addition, the enterprise is trying proactively to consolidate its position as the standard transportation solution. Throughout the recent disputes in France - where cabbies riot to get the French authorities to note their distress - Uber has proposed to open its portals to all professionals looking for a second career.
That, along with the promotion and assistance of start-ups like Kutsuplus, would have been the right regulatory reaction to Uber. Unfortunately, there are very few political innovations in this area, and the most important answer to Uber has so far come from other Uber-like businesses that are dissatisfied with their domination. For example, Indian Ola, Chinese Didi Kuaidi, US Lyft and Malaysian GrabTaxi have joined forces to enable clients to purchase taxis from each other's apartments in the country where they work.
It is not enough to create a sustainable system of assistance in which innovative people like Kutsuplus can thrive; substituting Lyft for innovation will not resolve the issue as it follows the same corrosive mode. A rather relaxed approach to tax for tens of years, coupled with rigorous compliance with the savings policy, has consumed government funds for experimentation with various forms of service provision, such as transportation.
It is not surprising that so many of them begin like Kutsuplus, only to end like Uber: These are the most structural limitations of working with real estate developers who are expecting massive yields on their investment. Identifying and financing a project that would not have such restrictions would not be so difficult in itself; what will be difficult, especially in the present business environment, is to find the money to reinvest in it.