Imagine yourself in this situation: You are in San Francisco for a business meeting had finishes ahead of time. You suddenly realize that by changing flights and making a quick dash to the airport you can arrive back in Princeton in time for a few hours sleep and a chance to take your kids to school in the morning.
Because of the time difference it is too late to ask someone in the Princeton office to arrange for a car to meet you. By the time you are scheduled to arrive in Newark it will be far too late to avail yourself of the public transportation network that links Newark and Princeton. The only choice at that hour is a cab and at this point, if you are a relatively tech-savvy businessperson, you know that is really two choices: a taxicab or a car service such as Uber.
The taxi drill hasn’t changed much in the last half century or so. A classic cab with a medallion on top hopefully would be waiting in a line outside the terminal. You could look for one willing to go to Princeton, agree on a price ($100 or possibly more), and then get driven to your door.
The Uber car, the big new thing in personal transportation, would be operating somewhere in the vicinity but linked to the network of potential riders and drivers through a cell phone-based app. If you are already a registered Uber user with an app installed on your cellphone, you would tap once to set your pickup location, another to request the car. Within seconds, the Uber app would find the nearest driver, alert him or her to the request, and quote a price (possibly as low as $60). Even as you are walking through the terminal to the pick-up area, you would get an ETA for your car, and you could even watch the map as the car made its way to the location.
It couldn’t be easier (or cheaper), which is why — in the densest populated areas and even in the relative sprawl of central New Jersey — Uber is thriving, threatening the existing taxi cab industry, and drawing the attention of state legislators, who are considering ways of regulating Uber and other nontraditional ride sharing services (see sidebar, page 35).
Uber is another of those classic Internet start-ups, though not exactly a rags to riches story. The idea for a ride-sharing company came up in Paris in 2008, when two American tech veterans who had already started and sold web-based companies were searching for their next great business idea at LeWeb, an annual European tech conference. Kicking around some ideas, Travis Kalanick and Garrett Camp remembered the troubles they had hailing a taxi on a snowy night, and theorized that some business might address that problem.
A year later, back in San Francisco, where finding a cab when you really need one can also be a challenge, the talk again turned to an Internet-based car service. This time the idea stuck. Kalanick and Camp founded the company as “UberCab” (uber means above in German and has come to mean “the ultimate” in America) in 2009. Its funding reached $2.8 billion by 2015. It is projected that revenues will reach $10 billion by the end of the year.
Now Uber is expanding in New Jersey, having just opened an office in Hoboken and boasting a network of about 5,200 drivers and estimating that the number could grow to 10,000 within a year.
If you use the Uber app in the Princeton area, the driver who turns up to take you to work, home from the bar, to catch your train, or even to take your kids to school after they call to tell you they missed the bus may well be Jonathan Zissman, who has been driving for Uber since late last year.
Uber would not say that Zissman “drives for” it. Technically, Zissman is a “driver-partner” in Uber speak, an independent driver who uses the app to find people in need of a ride. They are not employed by Uber, and are free to use that app when they please. For Zissman, that is every weekday.
“I am in my car by 6 o’clock. I will generally go Monday through Friday until I can’t take it any longer that, usually to 4 o’clock or 5 o’clock,” Zissman says over coffee in Princeton after one of his shifts. “I’m pretty sure that I am unique on the whole because I don’t think a lot of Uber drivers are full-time drivers. The vast majority of them fill in gaps on weekends and at night.” Zissman says.
He’s right. The majority of 5,200 New Jersey residents currently driving in the Uber network are part-time drivers. Some are students looking to make a little cash, others are in part-time work and choose to use Uber to top up their income, other still are in full-time employment and need Uber to make more money.
Getting a tally of how many co-workers Zissman has in the Princeton area is difficult. The driver version of the Uber app doesn’t list other cars nearby. Zissman guesses that the busiest time seems to be Saturday morning, when as many as 10 cars might be driving in the Princeton area.
An analysis of driver-partners published jointly earlier this year by Uber and Princeton professor Alan Krueger showed that 60 percent of drivers had another job. The same study also showed that Uber drivers were younger, better educated, and more likely to be female than taxi and limo drivers.
Zissman is 53, in the upper age range of Uber drivers. A Griggstown native, he graduated from Ohio State in 1984. He majored in broadcasting and broadcasting is still his first love. “That was what I really wanted to do. I worked in local radio from 1993 through to 2001. That was the most fun I ever had doing anything,” Zissman says. He worked on a couple of local radio stations as well covering Princeton football and basketball games on local cable.
However, eventually the commercial nature of local radio got to him. “I had several occasions when I lost my spot because of the sale of a station, or because someone with authority wanted their friend to have my spot,” he says.
Zissman’s mother was an oral hygienist, and his father, Lorin Zissman, founded Total Research, a market research firm at 5 Independence (which since has been sold to Harris Interactive). Zissman spent some time at his father’s company after college, working his way up to managing the data processing departments for several years. After working as a bartender, at a Burger King, and with his brother and friends at a New England Soup Factory in South Jersey, he moved to Phoenix, Arizona, having been introduced to the area by his now ex-wife.
It was here that he got introduced to driving for a living, first as a delivery driver, then working for cab companies, and learned how the cab industry works. “You lease a car for a certain amount of time, be it 12 hours, 24 hours, or a week,” Zissman says. “You pay for that period of time. You take care of the gas yourself and then whatever is left over is yours.”
Not all cab and limo companies work this way. Some will lease the driver a car for a certain period, meaning the driver has to drive for as long during that time as possible to earn back the cost of the car and his profit on top. Others offer a split of the take, usually 60 percent for the company and 40 percent for the driver. Tips usually go straight in the driver’s pocket.
Zissman has written a book about his time as a cab and limo driver, “Diary of a Cab Man,” which he self-published. “It was cool to recall all that stuff, and not one thing in that book didn’t happen to me exactly the way I told it.”
He moved back to Princeton in 2011, working for several area cab companies, as well as a courier and delivery driver. Then Uber came onto his radar last summer, when the company was recruiting heavily in the area. For a while he worked as an Uber driver during the day and a Dominos driver in the evening, before partnering with Uber exclusively in December.
Uber takes a percentage of Zissman’s earnings for using the app, but he says the split is fairer than most in the cab industry. “I get the lion’s share.” says Zissman. Uber claims that in an area like New York, the median salary is up to $90,000 a year for a full-time driver. Zissman was vague on how much he earned, but said it was easily enough to live comfortably on.
Uber also offers certain incentives for the drivers to stand by and be ready to drive in certain time periods. The company might offer a guaranteed gross amount if a driver works steadily in a certain time period.
When a request comes in, Zissman has 15 seconds to accept or not, before it is passed to the next nearest driver. Once accepted, he doesn’t get a lot of information on the rider. Just a name, the passenger’s rating, and a “conduit” phone number. Uber does not pass the real phone numbers of passengers on to the drivers, instead routing them through its own system.
He also gets information on “surge pricing,” one of Uber’s most criticized practices. Based on the economic principal of supply and demand, Uber’s surge pricing allows Uber to ration its cars to people who want them most at difficult times, such as during bad weather or peak hours. But sometimes people have requested an Uber car without realizing that surge pricing is in effect. Stories of $500 trips that cover just a few blocks quickly make the headlines and add to the resentment towards Uber. The company suspended surge pricing during some east coast blizzards to avoid the negative publicity.
Surge pricing is sometimes in effect in New Jersey, particularly at peak hours, but Zissman says that surge pricing is mainly in effect around Rutgers, as students leaving the campus at the same time are looking for a ride.
On one recent day a surge price of 2.8 was in effect around the Rutgers area. This meant that any fare was 2.8 times the normal. At such a time, a usual $35 trip to Newark would instead cost the rider over $100. The app does tell the rider that such pricing is in effect, and some stories of people with exorbitant charges come from those waking up the next morning with a bad hangover.
But $100 trips do not make up the majority of Zissman’s fares. “Sometimes you just need transportation,” says Zissman, “I can’t tell you how many $5 fares I’ve done at 7:30 in the morning for some Princeton University student because it’s too cold for them to walk to class. Happens all the time.”
Zissman described one recent fare from the Hyatt Regency to nearby Canal Pointe, a drive of only a few minutes. If you were to use one of the town’s taxi or limo companies for this ride it could set you back $12 to $14 before a tip. With Uber the trip costs just $5, which is the minimum fare for Uber. Plus there is no tipping added to the pre-arranged price charged to your credit account (though Zissman says he does not turn tips down).
This kind of ride is Zissman’s stock in trade and why Uber survives well in a place like Princeton. Short trips are too expensive in regular taxis, meaning residents must either use their own car or use public transit, which is sparse. Zissman picks up riders from the nearby schools, as well as lot of Princeton University students. This younger demographic is the most likely to use Uber over a regular taxi service.
Since the beginning of the year, Zissman has been keeping a record of his trips. A little more than half of his fares are $10 or less, and 85 percent are $25 or less, which is about the minimum you pay for taxi fares between townships in the Princeton area.
Once a week he might run someone into New York (average cost: $90 to $110), not a trip Zissman looks forward to, due to the traffic and pedestrians in the city. He also does not then pick up passengers in New York. Instead he heads back to Princeton. Sometimes he will take Route 1 back and turn on the Uber app, looking for fares along the corridor.
Zissman says that background check for Uber took two months. Previously Zissman had no trouble with background checks, so he was surprised that the Uber check took so long. He believes it may have been because he joined the service just as the first wave of negative stories about the service were coming out. They also checked over the condition of his car, a Hyundai Sonata, to make sure it was up to standard.
Information provided by Uber showed that Uber “partners” go through extensive background checks. There is a three-step screening process including checks with county, state, and federal records. However, that hasn’t been enough to completely protect passengers. In September, 2014, an Uber driver attacked a San Francisco bartender he was driving with a hammer, and an Uber driver in New Delhi, India. was accused of raping his passenger in December, 2014. Other reports of assaults, robberies, harassment, and even kidnapping have made headlines in the past year.
Uber now has a dedicated safety team conducting a review of the Uber platform recently and the company is trying to institute its findings. One recommendation is an SOS button that is being trialed in India, the location of the alleged rape. The button alerts Uber and the authorities in the event of an emergency. Updates to the app also let users share their position with friends, so that multiple people will know where the Uber car is at all times.
For some, though, this is not enough. Along with the additional insurance requested by the bill under consideration in New Jersey, there are requirements for much more stringent background and other checks on Uber drivers. Drivers would be required to get an endorsement on their driver’s licenses certifying that they and their vehicles have been checked by the state for commercial driving. They would also need to get their insurance, license, and registration checked each year, as well as undergoing health and drug checks alongside the criminal background checks.
The Limousine Association of New Jersey is one of the associations that has been pushing the legislature to rein in Uber and hold it to the standards that other taxi and limo companies are held to.
“For a transportation company to come into New Jersey and subvert the rules and regulations that are already established while they want to comply with another jurisdiction is appalling” says Jeff Shanker, the president of association, and executive vice-president of A-1 Limo on Emmons Drive in Princeton. Shanker says that Uber has impacted his business, but that his main concern is public safety.
“There are rules and regulations for how taxis and limousines are supposed to operate in New Jersey. They refuse to comply with the rules and regulations of New Jersey.” Shanker wants Uber drivers to have full-time commercial insurance (some taxi drivers report that they pay as much as $4,000 a year for insurance), undergo medical fitness testing, as well as undergo drug and alcohol testing, all policies A-1 Limo chauffeurs have to follow.
Zissman thinks the Uber scare stories have been blown out of proportion by special interests hurt by Uber’s success and looking to curtail the company. He personally has horror tales to tell, but neither has he come across any anger from taxi or limo drivers. For him, as a driver, Uber is safer than a regular cab. No cash means no issues with people running off without paying, which used to happen once a month or so when he was driving taxis in Phoenix.
Additionally, the Uber app runs on a rating system. At the conclusion of every ride, the passenger rates the driver, and just as importantly, the driver rates the passenger. When you open the app and request a ride you can see the rating that your driver has. Uber wants drivers to stay above 4 stars, which isn’t a problem for Zissman with a 4.73 star rating.
The star rating system incentivizes drivers to make sure the passengers enjoy their trip. Zissman always has bottled water, gum, and a lint roller ready for his riders. He has given ratings of fewer than five stars to only two passengers, both for wasting his time.
Zissman is very positive about the Uber experience. “Part of the charm of Uber is that there is no typical day,” Zissman says. He tries not to turn down calls, both on a personal and professional level. He enjoys the service side of his job, helping people who are looking for a ride, whether they are a commuter needing to get to the next train, or a student late for class. Professionally, Uber drivers have to accept at least 90 percent of pick-ups. This isn’t a problem for Zissman, who has accepted 97 percent of calls.
He enjoys driving in the Princeton area especially. “Princeton kids are some of the nicest people you meet,” says Zissman. This area also allows him to be near his family, including his brother who lives in New Jersey and works in New York, as well as his friends.
Zissman says there is always a need for cheap transportation in college towns. Ann Arbor, Madison, and Tallahassee, along with Princeton are the towns that are seeing sharp increase in Uber use. Uber says that trips near rail stations make up almost a quarter of trips in New Jersey, and, current bill notwithstanding, the company hopes to add another 5,000 rider-partners in New Jersey within the next year, making it one of the biggest employers in the state.
Zissman’s only criticism of the Uber model: Everything is done through E-mail or messaging, when a quick phone call with a real person at Uber HQ would deal with an issue quicker. Zissman once accidentally gave a rider a one-star review. He wanted to cancel it, but couldn’t.
Even as the legislators debate imposing restrictions on Uber, and as taxi cab companies argue that the high tech competitor ought to pay some of the same regulatory and insurance fees as the taxis do, Zissman remains optimistic about his Uber future.
He considers the job recession-proof. “People always need transportation,” he says. Zissman speculates that the big companies, like A-1 Limo, will adapt and survive, but the smaller cab companies are the ones that will truly struggle against Uber.
“Everywhere they have fought, Uber has won” Zissman says. “They are the future.” And he is already thinking about his next car, and recalls his time in Phoenix, when he often drove Priuses, which he found both economical and spacious.
A Passenger’s View
Benedikt Westrick, a principal at Rosemark Capital Group, a growth equity firm at 90 Nassau Street, is in the business of investing in up-and-coming companies so he was naturally intrigued by Uber’s rise.
Westrick first started using the service to get to and from Newark Airport, finding the fares more reasonable with the Uber service. A trip from Princeton to Newark airport might cost $100 in a cab, but only $60 or so using Uber.
Says Westrick of the price of taxis in the Princeton area: “If you go from Princeton Junction to downtown Princeton the lowest fare is $15. Uber is a good chunk cheaper than any regular taxi service.” The price of an Uber car is consistently half that of a similar taxi ride in the Princeton area, bar any surge pricing in effect.
It was these smaller trips that really showed the benefit to Westrick, and in particular to his wife. Anna Westrick, an anesthesiologist at Princeton Medical Center, hurt her ankle last fall and was in a leg brace for eight weeks. She couldn’t drive, and with no easy mass transit options to get her to her job in the O.R. each morning, she needed a way to get to work quickly and cheaply.
Uber provided the ideal option. Their home is just a few miles from the medical center. This ride would still have cost $10 to $15 in a regular taxi, but with Uber the distance barely topped the $5 minimum that the service charges. She ended up using Uber most days while she was not able to drive.
Price isn’t the only thing that keeps bringing Westrick family back to Uber.
“Something I find really comfortable about with the service is you know who is coming, what car they are coming in, and there is a very consistent quality. The car is clean and the driver is nice, even on the lower end spectrum,” says Westrick.
Uber has expanded to offer different types of cars for different types of rides. The main option is UberX, and it is this that the Westricks and most others use. A basic car, usually a regular sedan, is used and this is the cheapest option. The next step up is UberSelect, which uses luxury sedans — Mercedes, BMW, Audi — and is more expensive. UberBlack is the top of the line “executive” option and also uses luxury sedans, but with the addition of a licensed limo driver. You can also request UberXL if you are riding with more than four people and need an SUV or minivan to pick you up.
Westrick says that the only downside of Uber in Princeton is the volume of drivers available. “Sometimes in the morning, my wife would check on the app and see how many were around, and sometimes there weren’t any available. Because there is less demand, there is less availability.” Zissman may sometimes be the only person driving in the Princeton area, and if he is unavailable, then there is no Uber.
Westrick would also like to see a feature that allows you to book an Uber car in advance. “As far as I know, you cannot really book in advance. This is something that gives people piece of mind.”
From his business perspective, Westrick has no doubt that services such as Uber are the future and that taxi companies are right to be worried. “I think that there is a good chance that they will wipe out the cab companies. If there is a better service at a better cost, I don’t see why I should pay those prices.”
However, the ebb and flow of car demand in somewhere like Princeton does mean that he thinks the local taxi companies here will survive. “I think that in less dense areas the regular taxis will still stay, as there is insufficient demand for people to become full-time Uber drivers and I think that Princeton is kind of on the edge of such a system.”
He also understands how galling it must be for taxi drivers to see a business taking their livelihoods away. “I can understand that people saved a lot of money to buy the permit and pay a lot of fees to the local municipality to have a license and all of a sudden someone is popping up out of the blue and basically it is taking the shortcut.” says Westrick on the plight of the local driver. “I know a local Guatemalan who has sweated blood to earn the money for his cab and license and now just as he is starting to see some reward he is hit by some app in California.”
Westrick thinks that the government is in a difficult position, “trying to balance the people who have abided by the rules and on the other side progress.” He says that there should be a transitional period where this is handled in a reasonable way, but “I think it is naive to think that you can just pass a law and hope that it is gone. The government should play some kind of buffer and help out in this transitional phase.”
But ultimately, Uber is likely to win in some form, simply because the business model gives people what they want. “As long as they deliver value and standards I don’t see why they should not be allowed to provide it and I shouldn’t be allowed to take it,” says Westrick.
Uber is just the first wave of a “start-up tsunami,” according to Westrick, that will hit us again and again in the coming years, challenging the status quo, and offering solutions, and problems, that we haven’t previously faced.
The scenario at the beginning of this article, about the traveler arriving in the middle of the night at Newark Airport and needing a ride to Princeton, is all too familiar to Westrick. In fact, in just that situation recently, he encountered one of those information age problems: His cell phone battery was dead. Unable to contact Uber, he made his way to the old-fashioned taxi line and negotiated a $100 trip to Princeton.