Over two years ago, I wrote this post exploring the concept of Uber-meets-Shuttles to get point-to-point car service at a lower cost with only slightly less convenience. I spent some time exploring the model but chose not to pursue it.
The underserved part of the market in the middle of the cost-quality curve is starting to receive attention. Hitch has been building out the model (with sedans instead of vans) for the past year and this summer they exploded into public beta. Sidecar has been toying with shared rides for a few months, too. Last week, however, both Lyft and Uber - the biggest players in ride-sharing - announced their entrance into the space.
I’ve been taking Hitch all summer and loving it (signup with code ‘randy’ for a free ride). I’ve had only one ‘multiparty’ ride but it was convenient and the fellow passenger shared 70 mutual friends with me.
Here are a few thoughts on the developments:
The key thing to making the model work is customer density. The drivers need to be carrying multiple passengers most of the time for the model to actually deliver on the low costs it promises. In order for that to happen, there need to be tons of active customers. I fear that Hitch won’t reach this point before they run out of money - they’re currently subsidizing solo riders on their platform. Lyft and Uber have an extreme advantage on this front.
With Hitch, I order a car and it’s confirmed promptly. If we need to pick up / drop off someone else, it’s right on the way. With Lyft, I had to sit for about a minute as it sifted through possible matches. Waiting to see if I get a match is not a great experience. Sidecar doesn’t guarantee the discount unless I’m matched with someone else. I haven’t tried Uber’s offer yet.
I’m happy sacrificing a little quality to get a much better price (if I’m not in a rush). However, I don’t like the uncertainty in the trade-off. I’m going to use Hitch - where I know I get the best price - rather than gamble with the others.
Events / Commutes
I think there’s a massive marketing opportunity to hype these services during major events. Events drive a concentration of users to the same place, helping with the aforementioned density issue. I think one of these companies should offer limo rides to the next music festival, Giants game, etc.
The same logic works for commutes, especially on underserved routes (24th and Mission -> 4th and King). I’ve heard of the companies working on partnerships with startups for their employees - seems like the right move.
One these companies start to achieve customer density, I think the real opportunity lies in shuttle buses - as I wrote about in 2012. This allows for an even bigger trade-off in cost quality. They might be able to approach the price of public buses and with only slightly less convenience than Uber / Lyft today.
I’m very excited to see how this market evolves.