Uber is streets ahead on taxi service

I SCREAMED: “Wrong way!” But my warning fell on Bluetoothed-ears. My taxi driver was hurtling down a one-way street — the wrong way.

It’s no surprise Uber has made the taxi industry as mad as hell.

I SCREAMED: “Wrong way!” But my warning fell on Bluetoothed-ears. My taxi driver was hurtling down a one-way street — the wrong way.

Worse, he’d now taken his eyes off the road and was staring intently at me — trying to work out why I was screaming at him — while a relative in a faraway land continued yabbering away in his ears.

“The road! The road! Focus on the bloody road!” I roared.

He slowed the car to a stop and apologised profusely. He’d never taken this road before — Little Collins St,

Truth be told, I was just happy to be in a taxi and on my way to the airport. It had taken three goes at dialling 13CABS before I finally got through:

“Next avay-la-bool” said operator Kath or Kim (or maybe, Julia), before hanging up on me. Twenty minutes went by. No one showed up.

In desperation, I stood on the street and flagged down a taxi.

The clapped-out Ford Falcon’s smell reminded me of Ben, a bloke I lived with in my uni days: a sleazy mix of cigarette smoke, sweat, and grease — that was fighting a toxic battle against an overpowering fake-pine chemical deodorant.

I got to the airport just as my flight was closing, but couldn’t make a dash for it. The cabbie nearly teared-up when I pulled out my card — apparently the payment processor was offline. The next few minutes were seriously like watching my old man try and send a text message: all grunts, mumbles and violent swipes.

After a few failed attempts, the whirring of the receipt printed out: I was slugged $86 for the ride — including a 10 per cent whack on top of the fare for paying by card.

I know, I know, that’s just the way it goes, right?

Wrong.

Enter “Uber”, a phone app that has its own network of private drivers that operate in cities all over the world (including Melbourne and Sydney — and launching in the rest of our capital cities this year).

Here’s how it works:

You open the app and it pinpoints your location. You type in your destination, and it automatically quotes you the fare. You can then track the car that’s coming to you in real time. And the drivers have nice cars — the last ride I got was in a late model Holden Calais.

The app automatically charges your credit card and emails you a receipt — and encourages you to rate the driver, just like you do on Amazon.

And here’s the killer — Uber costs roughly the same as a normal cab.

Until now, owning the licence plates to operate a cab has been very profitable. Competition tsar Allan Fels reckons Victorian taxi plates have been a better investment than shares or property.

In 1989 you could have purchased taxi plates for $130,000. By 2012 they had risen to $500,000 — And although the owners made good dough, the cabbies got screwed.

According to the Taxi Association of NSW, drivers split half their fare with the owner of the plates — which means on average they earn just $29,000 a year. Uber, on the other hand, takes just 5 per cent of the fare — the rest goes to the driver.

It’s no surprise Uber has made the taxi industry as mad as hell. All around the world cab companies are trying to run it out of business. In the US they’ve tried and failed to ban Uber. In France, they smashed their windows and slashed their tyres.

Here in Australia the taxi lobby is demanding new rules to kneecap Uber from stealing its customers.

It’s done everything in its power to protect profits — well, except for providing customers with a better service. And that was the taxi industry’s monumental fender-bender. Enter Google.

Last year Google invested $US258 million in Uber — its biggest-ever private investment — and it makes a lot of sense when you think about it.

For years Google has invested millions of dollars into making driverless cars. This isn’t something from The Jetsons though; it’s already racked up 500,000km of crash-free self-driving (a better record than Mrs Barefoot).

Today all the major car companies are trialling Google’s technology. Nissan plans to be the first out of the gate, and is committed to rolling out driverless cars within five years.

Here’s the play in the year 2020: you Google an Uber cab (or instruct your Google Glass Goggles to order one) and the search engine sends a driverless, Google-powered taxi to pick you up and take you to your destination.

Uber is just one of hundreds of companies that are terrorising a laundry list of industries that have grown old, fat, and incredibly rich while providing shoddy service. And, one-by-one, the internet — fuelled by young creative entrepreneurs — is busting them open. That’s both the challenge, and the opportunity, that faces us as investors.

Tread Your Own Path!

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Question of the week

BAREFOOT Investor buys a home without a deposit?

This week it was actually me asking the questions ...

As you drive out to my farm it looks like a war zone. Most of the land is charred black, and the fires didn’t leave a lot standing. But my letterbox made it — and this week I received some marketing mail from a mob called “Home Without A Deposit”.

One man’s house burning down is another man’s opportunity, I guess.

According to their material I could own a home for as little as “$420 a week”. Nice. And I could “qualify in 60-seconds”. Even better. And because my house had just burned down I actually had one minute to spare, so I called them up.

It’s a simple three-step process, which really did take just 60-seconds to explain.

First, the group arranges you a 90 per cent loan with a non-bank lender.

Second, because you’re still 10 per cent short (plus a range of other costs), the group will lend you the rest of the money themselves — at an eye-watering 16 per cent a year.

Finally, when you’re up to your eyeballs in debt, you’ll be free to build your new home ... through their own builders.

Talk about a fire sale.