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Why A San Francisco Cab Company Blames Uber for its Bankruptcy

January 25, 2016, 1:30 PM UTC


CEO: Travis Kalanick
40 Under 40 rank: 13 Outsourcing at its finest: Uber's app blends the convenience of online ordering with the luxury of having a personal driver. With the Uber app, users can order a driver-for-hire to taxi them from point A to point B. Riders who sign up pre-enter their payment information, so the ride itself is cashless and easy to split between other users. Plus, riders can track their driver's progress via GPS on their smart phone, ensuring a reliable pickup. Vehicles come in a variety of styles, from economy to mid-range sedans to SUVs to upscale rides. Uber is now available in 18 countries and 24 U.S. cities, and it's growing.
Photograph by John R. Coughlin — CNNMoney

It has become a cliché in the technology world that everything moves faster now than it used to. The cost of starting a company is lower. The time it takes to get to market is shorter. The ability to disrupt even established and powerful players is greater.

Clichés must be challenged because they often mask a shallow understanding of the facts. In this case, however, the cliché is true.

Take, for instance, the blink of an eye it has taken to all but cripple the U.S. taxi industry. Lyft and UberX (Uber’s ride-hailing app for amateur drivers, versus its earlier service for licensed limousines) both started in 2012. On Friday, San Francisco’s Yellow Cab cooperative filed for bankruptcy protection, a development Fortune’s Kia Kokalitcheva previewed two weeks ago. At the time, it appeared Yellow Cab’s financial woes had more to do with a personal-injury damage award, than competition from cleverer upstarts. Yet according to court papers examined by the Wall Street Journal, the San Francisco taxi organization cites worsening business conditions as a reason for its Chapter 11 filing. (The co-op intends to continue operating as usual.)

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It’s a safe bet that no healthy business would experience weak business in a market as overheated at San Francisco. The city at the heart of the global technology boom will prove a curious footnote in the demise of the global taxi industry. San Francisco’s taxi service was particularly bad. Hailing a cab on the street was more like a small-town experience, and calling for one was an erratic proposition at best. Adding insult to injury, Yellow Cab now offers a ride-hailing app of its own, pathetically named, and I am not making this up, YoTaxi.

What began in San Francisco has spread lightning quick around the world. Yet so many questions remain. Can Uber consistently make money? Is Uber the global winner, given the many competitors it faces, including a global anti-Uber alliance? Will regulators step in and alter the path of progress. (It wouldn’t be the first time.)

Uber strikes exclusive deal with Super Bowl 50 organizers.

Are you in a business that could be disrupted by a fast-moving, (initially) lightly capitalized, risk-taking upstart? Without knowing what you do, the answer is far more certain than these others. The answer is yes.