Uber Lyft Competition – Can the Big Boys be Beat?

Arcade City – The death of Uber, Lyft, Didi and Airbnb and all Gig companies

Recently I was asked what I thought about an “innovative blockchain technology” rideshare service called “Arcade City.” 

In this blog post I hope I don’t sound like I’m “bashing” Arcade City… being a rideshare driver is not well understood and there is a lot of “bad” information and frankly “nonsense” about rideshare driving on the internet.

I put in my best effort researching Arcade City and I’m sharing what I learned along with my thoughts on the subject of any Ridesharing company being successful in an Uber Lyft competition.

I started Rideshare Business Guide and wrote two books on the subject because after about a year of driving I decided to be an honest voice on the subject helping existing drivers and people thinking about giving rideshare driving a try.

If you’re reading this now, I believe you’ve found the best source for meaningful answers to rideshare driving questions.

It’s common for my passengers to ask if I like Lyft or Uber better but every few months a passenger will ask if I’ve heard of [fill in the blank] Ridesharing company or if I think someone could succeed creating their own small transportation service (like a limousine service but using a nice vehicle.)

I’d never heard of Arcade City, so I did a little research… in this blog post I’ll share some of what I learned about the company but more importantly discuss what it would take to compete with Lyft and Uber in a given city or on a larger scale.

 

Competing with Uber and Lyft

For this blog I referenced the best article I could find which describes Arcade City this way:

 

“Arcade City is an Ethereum blockchain platform developed by an ex-Uber driver frustrated with the centralized control that Uber had over ridesharing and driver’s income.”

 

Unfortunately, the article is not dated but the next quote suggests the article was written late 2018 or early 2019:

 

“Read on to understand the potential of Arcade City and why it will destroy the Uber IPO and in fact, destroy all the current rideshare gig programs, and maybe even all centralized gig economies are doomed by nature of blockchain and decentralized networks.”

 

Uber’s stock hit the public market in May of 2019, so the referenced article was probably published a few months before that date.

Wow!  

 

“… destroy all the current rideshare gig programs…” 

 

Arcade City must have loved this article! 

Given what I found in my research it could be the article’s author is a friend of the company?

I read the latest rideshare industry news every day and the first time I even heard of Arcade City was from a passenger… most of the articles I found in my Arcade City research were over two years old; there was almost zero detailed information on Arcade City’s web page; and the company’s Facebook page is private so nothing available publicly there either.

I’m thinking if there were any chance Ridesharing company Lyft, Uber, or other transportation network company (TNC) were threatened with destruction by… well any company… it would be in the news at least a little?

The ex-Uber driver from the first quote is Christopher David who says after Uber dropped fares in his town of Portsmouth, New Hampshire he decided to start Arcade City to compete head-to-head with Uber and Lyft.

The idea that Uber or Lyft making changes in the way drivers are paid resulting in significantly less income is a common driver complaint. 

These driver complaints aren’t wrong… but most are at least a little misleading not giving the reader the whole picture. 

 

 

Rideshare driving income

I’ve always kept track of my gross income and my hours on the road and know that in my experience (almost 4 years of full-time hours driving) my average gross income per hour has been consistent… even after the many changes Lyft and Uber have made in the way I’m paid.

An Uber or Lyft change could mean drivers are paid less for a given trip but if lower fares attract more passenger trip requests drivers are less likely to be sitting empty earning nothing.

Given I don’t have any control over how much a given passenger pays the only metrics that have ever been interesting to me are:

  1. Average earnings per hour
  2. Earning enough income to pay my bills

Averaging all my pay in 2018 and 2019 I’m earning, on average, over $24 gross income per hour driving in Denver, Colorado metro area population 2.8 million. 

Sure, some days/nights I earn a little less and sometimes I earn a little more.

To see over two years details of my daily and weekly earnings download a free copy of my Rideshare Earnings Case Study.

The founder of Arcade City says he used to be an Uber Technologies Inc driver in Portsmouth, New Hampshire a small city near the Atlantic coast with a metro population around 22,000 people.

The closest city with significant population is Boston, Massachusetts (4.6 million) which is about an hour highway driving from Portsmouth.  On a map Portsmouth is clearly not a suburb of Boston… there is a whole lot of green space (state forest land) between the two cities.

If I were working with someone wanting to give rideshare driving a try and lived in Portsmouth I would suggest driving to Boston to earn the most income because a population of 22,000 is simply not going to produce enough passenger trips to make rideshare driving pay more per hour compared to a minimum wage job.

I can see how maybe in a small population city like Portsmouth one of the many Lyft and Uber changes in the way drivers are paid made a bigger difference for driver’s “take home pay.”

Many of these complaints are referencing the reality that from the beginning of Lyft and Uber through about 4 years ago passengers were paying significantly more for a trip… at the beginning passenger fares were at least double what they are in 2020. 

A driver who sits waiting for their next ride for a long time (typical in small population cities) is probably going to “feel” a pay change meaning less pay per individual trip compared to a driver who stays busier because more population means greater potential for more rides per hour.

Anyway… I thought it was at least interesting that in my research I did not see any connection between Boston and Arcade City… I searched specifically for the connection found nothing… not sure if this means anything but no connection between the founder’s home and the closest big rideshare market made me wonder just how “real” was the Arcade City opportunity for drivers?

I spent over an hour reading everything I could find about Arcade City (and much longer writing this blog post), again most articles were 2 years old or older… then I went to Google Play on my Android phone to see if I could download the Arcade City application… I could not find the application on Google Play.

On an iPhone I looked for the Arcade City application on the Apple App Store again nothing.

As I mentioned earlier Arcade City website does not provide much information… really almost nothing. 

 

 

Rideshare sign up now

There is a “Sign Up Now” button where I was prompted to select if I was a rider or driver; my home city; then the requirement to login with my Facebook account.

It is not my habit to connect my personal or business Facebook account to anything I have not vetted and feel comfortable with… even if the only “bad” result were a bunch of spam I’m unwilling to take risks with my sensitive information.

On the Arcade City website for “Home City” Denver, Colorado was not an option. 

There were five “Home City” choices presented to me (I assume the website knew I was searching from Denver), all five choices were located in metro area Denver but none were in my part of the greater Denver area… more important to me as a potential driver (since passenger trips come from all over the metro area) there was not an option to choose “Denver.”

If “Denver” were an option I might have completed the sign up process just to see more (I’m a very curious guy) but given the results of my research found almost nothing useful to me as a potential rideshare driver… the Arcade City website lost me at “Login with Facebook”… just not going to do it.

I’m certain I’m not the only potential driver who would say “no” to the Facebook sign in requirement… now imagine a potential passenger who really just wants to get where they are going… if Arcade City makes it this hard to understand what they do and how they do it… most people are going to stick with the service they know which in most cases is Uber and/or Lyft.

Again, from the referenced article:

 

“…the potential of Arcade City and why it will destroy the Uber IPO and in fact, destroy all the current rideshare gig programs, and maybe even all centralized gig economies are doomed by nature of blockchain and decentralized networks.”

 

I’m just not seeing it.

I don’t think it’s just my thinking… I suspect it would give most people pause being asked to connect their Facebook account before they could maybe learn directly from the source what a company is all about?

Anyway, not seeing the application (driver or passenger) on Google Play or Apple App Store was enough for me… if signing up to be a driver or passenger is significantly more complicated than Lyft and Uber then the referenced article’s title suggestion Arcade City may bring: “…The death of Uber, Lyft…” is simply not true.

Some of my research suggested in order to get a ride from Point A to Point B the potential passenger has to post a request on the Arcade City Facebook page. 

I believe the ride request has to be posted on the Arcade City Facebook page for the city where the passenger lives… it wasn’t clear but seems logical?

I’m guessing a driver has to see the post then contact the passenger to arrange the trip… maybe through Facebook Messenger?  

Sounds significantly more complicated compared to the way Lyft and Uber work.

So… Arcade City is not for me but worth talking about from my research there were some “benefits” listed for Arcade City’s service… benefits often shared by other TNCs attempting to compete with Lyft and Uber.

 

 

Driver receives full passenger fare

Some of the benefits used to attract new drivers sound good… at least on the surface:

 

  1. “Drivers get full payment with no fees…”

 

Lyft and Uber’s “cut” of each passenger fare works out to be about 25%... it’s currently more complicated but averaged out over a whole lot of trips 25% is about right.

One thing current drivers use to make the case that Lyft/Uber take a much higher percentage is when they include the fee Lyft and Uber charge… typically under $2 per ride.  On a short trip the extra fee can make the percentages look favorable for Lyft/Uber.

I see this fee (what it’s called has changed over the years) as similar to the fee we pay to purchase movie or concert tickets online… I think of it as a software application service fee. 

Anyway… the driver’s “cut” of what passengers pay is a bit more complicated but for this conversation about driving or riding with a company other than Lyft or Uber “about 25%” is close enough.

Arcade City is not the first rideshare startup hawking the idea that drivers keep “100% of what passengers pay” but in my experience there is always “a catch.”

In Arcade City’s case it appears the company does keep 10% of passenger fares paid through “the application…” that would be the application I couldn’t find on Google Play or Apple App Store.

More importantly to drivers (or people thinking about rideshare driving) is the reality that in order to compete with and beat Lyft and Uber and capture any attention from people wanting transportation the price has to be lower and the time before getting picked up has to be similar.

If the price to the passenger is lower, then drivers keeping 100% of the fare is not as attractive? 

If the passenger’s fare price is 25% lower compared to Lyft/Uber… then what the driver earns keeping 100% of what a passenger pays for a single trip is essentially the same.

In order for the “the time before getting picked up” to be similar to Lyft/Uber there would have to be a lot of [fill in the blank] TNC rideshare drivers out on the road. 

In short:

  • To have sufficient available drivers there has to be sufficient passenger business… driving is not attractive if a driver can’t depend on an average income similar to or greater than minimum wage
  • Not enough passenger trips requests means drivers are more likely to be completing rides for Lyft/Uber… where they are more likely to earn meaningful income compared to the “new” TNC (transportation network company)
  • Not enough drivers will mean passengers waiting a long wait time for pickup… so seeing a long wait time or no available driver with the “new” TNC passengers will open the Uber or Lyft application to get where they want to go

Getting the necessary critical mass of drivers and passengers will always to be very hard to achieve in any market already serviced by Lyft/Uber.

In order to “open” a new city a competing TNC would probably have to subsidize driver’s pay to keep them online ready to accept a passenger trip… a very expensive proposition in the current rideshare transportation environment.

At least in the United States any city/market not currently serviced by Lyft/Uber probably has too small a population for rideshare to work… again no rides = no drivers & no drivers = not reliable transportation so passengers don’t see rideshare as a viable option to get where they are going AND get back.

Another “benefit” competing TNCs use to attract drivers is the idea the driver can have some control over the fare the passenger is charged. 

 

 

Driver controls the fare a passenger is charged

In Arcade City’s case I found this statement:

 

  1. “Drivers have three options; choose the standard fee per mile and minute option or offer a “global” fee for the ride. The third option is there is no rate, and every driver sets his/her own rate, making the system even more competitive.”

 

What we’re hearing here is each driver has control over what they charge… although Arcade City’s way of doing this sound a little complicated? 

In my Arcade City research related to what passengers pay and drivers earn I saw multiple references to driver’s ability to:

  • Charge cash
  • Use any peer-to-peer payment option (passenger would have to be able to pay with the option(s) the driver uses)
  • Barter (trading service for service or something of value to the driver)

Believe it or not in the information I found about Arcade City I saw multiple references saying passengers could pay with “tacos.”

It’s quaint to suggest passengers could pay drivers by exchanging services or trading something a driver might value or even paying drivers with “tacos.”

But “quaint” is not going to cut it for me. 

Maybe in our YouTube world where funny can equal millions of views the idea of paying for a ride with tacos makes some kind of sense to promote a “fun” company? 

When I get out on the road my primary goal is to earn money which I use to pay my bills and buy things I choose to buy. 

It’s certainly cute to suggest drivers would accept something like “tacos” for payment but cute does not equal a viable business opportunity for potential drivers.

The referenced article even says:

 

“riders can negotiate a fee.”  

 

I would like some ability to set my own price for a ride… with almost 4 years’ experience and over 15,000 completed passenger trips there are a few scenarios where some control over what people pay for a ride from me would make sense:

  • I don’t like to navigate through traffic and pedestrians to get to a pickup after a big concert or sporting event… there are venues in Denver, Colorado that are always a mess when a big event ends and to navigate the mess for standard fare (or a little bit more) doesn’t appeal to me
  • I think every ride after midnight should be at least 25% more… if passengers don’t like paying more then can go home before midnight
  • I’ve earn standard fares driving on snowy streets… sometimes driving over 10 minutes to get to a pickup location suggesting there are not as many drivers out in bad road conditions… again a scenario I believe should always cost passengers more… if the roads are bad passengers will understand that fares cost more… the drivers on the road deserve to earn more when road conditions are bad

Maybe the TNC driver application could give me the option to set my fares higher by a percentage I control or allow me to add a dollar amount. 

That way I could set the application on a snowy day (as example) a ride from me today will cost an additional $5.00… if the passenger doesn’t want to pay fine with me I could choose to wait for a passenger willing to pay extra.

That said the idea of negotiating with passengers… negotiating the price of even a small percent of trips I complete… does not appeal to me at all! 

There will always be someone out there with a bag of homemade tacos… I can imagine driving to the pickup location thinking the passenger will be paying through the application then they get in my car and the passenger tries to negotiate a ride for a bag of cold tacos…

If the passenger and I could not agree on a price, then I’ve wasted my time and energy not earning income and probably being annoyed by a “ride for tacos” request.

I saw this “tacos” reference in a number of different articles about Arcade City… enough to suspect this is part of the “company line.” 

Again cute, quaint, but not in the least bit professional.

And speaking of professionalism “Arcade City” is the name of a casino operation in Branson Missouri; Orlando, Florida; and Pigeon Forge, Tennessee. 

The name of a company can be anything these days… how does the name “Uber” suggest getting a trip from Point A to Point B? 

The point is it is easy to choose a unique company name.

In an environment where a company name can be anything why pick a name used by other easy to find businesses?

 

 

Passengers allowed to choose their driver

Another common “benefit” from TNC’s competing with Lyft/Uber for drivers:

 

  1. “Riders can choose their driver, not just the closest one.”

 

The idea is drivers can build their business with riders who request them over and over.

And passenger can get the same driver over and over which would be nice… but in most markets having “favorite” drivers and “favorite” passengers makes zero sense.

As a Lyft/Uber driver in Denver, Colorado… which is spread out over 155 square miles… with a metro population 2.8 million people… I’m almost always getting one passenger trip request after the next for hours at a time. 

It’s rare my next pickup location is greater than 10 minutes from my current location and more commonly the next pickup is about 5-minute drive away.

A passenger who requested me as their driver could be located on the other side of the city or maybe I’m not even out driving or even planning to drive when the passenger wanted the trip from me.

If I was working and stopped completing one trip after the next in order to drive empty (deadhead mileage) to my regular customer’s pickup location the only way it would make sense financially would be if my regular passenger was willing to pay a lot more compared to what Lyft/Uber would charge… most people are not going to pay more just because they like a driver’s personality.

Maybe in a city like say… Portsmouth, New Hampshire with a metro population around 22,000 people and an hour drive (60 miles) at highway speeds from Boston, Massachusetts having regular passengers could make sense… because a driver in Portsmouth is not going to be completing one passenger trip on top of the next passenger trip most of the time.

My regular readers know that in a city with an extremely small population rideshare transportation (driving and riding) just doesn’t make practical sense because there will never be a critical mass of regular passenger trip requests so drivers will spend most of their time empty and not earning anything.

Driving in a city with a small population could make sense for someone just looking to earn a little money on the side but its extremely unlikely to produce consistent income per hour higher than a minimum wage job.

 

Pros and Cons of rideshare services

The referenced article provides a useful list of “Cons” with the rideshare service offered by Arcade City. 

At least some of these “Cons” or downsides could be shared by other Ridesharing companies attempting to compete with Lyft and Uber Technologies Inc:

 

  • “There is no driver filtration system; you don’t know if the driver picking you up is safe” (background check not guaranteed)

  • “There is no car filtration system, so you don’t know if the car is good” (states and cities set the rules for make/model/age of vehicles as well as safety check requirements)

  • “Passenger doesn’t know if the driver has appropriate rideshare insurance” (Uber/Lyft insurance covers passengers when they are in a driver’s vehicle)

  • “There is no ‘big daddy’ go-to when something happens, only the driver and the passenger” (imagine something “bad” happening with a peer-to-peer rideshare service)

 

All solvable issues… however, in order to solve these issues there would have to be company staff and infrastructure which is contrary to Arcade City’s business model of creating peer-to-peer relationships between riders and drivers.

Interesting “No big daddy” is also listed in the referenced article’s “Pros” for Arcade City… without Lyft and Uber in the mix it seems like drivers could have the opportunity to earn more but without Lyft and Uber in the mix the rideshare service has some critical issues which would give potential passengers pause.

Imagine a “new to your city” Ridesharing company attempting to complete with Lyft/Uber:

  • Without making sure drivers had been checked for clean driving and criminal backgrounds
  • Without guaranteed insurance coverage for passengers
  • Without guaranteeing vehicles are properly serviced… so safe

Jeepers man sounds ridiculous anyone would choose that new TNC instead of Lyft or Uber?

The reality here is simple… successful business models will be copied… or more accurately copied with new “spins” that appear to improve on perceived shortcomings on the successful model.

In my research of Arcade City one of the key “spins” is the use of “blockchain” the database technology behind Bitcoin and in Arcade City’s case Ethereum.

Remember from our first quote from the referenced article:

 

“…even all centralized gig economies are doomed by nature of blockchain and decentralized networks.”

 

I have a background in databases and have a working understanding of blockchain technology… based on my knowledge and research into blockchain databases there is a real potential that someday a rideshare driver and rider application based on blockchain will cut out the middleman and compete head-to-head with Lyft and Uber… but:

 

  • In order to compete against Lyft and Uber’s established businesses passengers will have to want to use the new player’s service… it has to be just as easy to use if not easier to use… more complicated to use is unlikely to get much customer traction
  • In the current rideshare market environment price and vehicle availability are the key metrics customers look at… potential passengers want to know which service is the cheapest right now… and which one can pick me up the fastest
  • Drivers want to earn… promises of earn equal or more compared to Lyft/Uber would have to be true or drivers will stick with (or go back to) the TNCs with proven earning records

 

 

On the lookout for new ridesharing companies

I’ll keep watching for “Lyft/Uber Killers” and as needed researching the new players but it’s hard to imagine anything but “boutique” services catering to very specific customer bases getting any traction. 

For example, rides for children given by drivers who have passed extensive background checks and vetted/interviewed by the boutique Ridesharing company to insure the driver will work well with children…

Uber and Lyft require at least one passenger be 18 years old and I’ve seen nothing to suggest they are interested in pursuing the under 18 market.

The boutique rideshare service will still have the “critical mass” problem… if you can’t keep a driver busy completing more or less one passenger trip after the next (or earning significantly more per trip) the boutique company will have to be “out of pocket” paying the drivers guaranteed pay… which means charging the passenger more because the extra pay will have to come from somewhere.

Again, I hope I have not sounded like I am “bashing” Arcade City in this blog… if there were a new TNC with potential in the Denver market I would be open to giving them a try… I could run a third TNC application on my phone… if the new TNC passenger request came in and I was available I’d turn off the Lyft and Uber applications and complete the new TNC passenger trip. It would be interesting to actively participate in the Uber Lyft competition by driving for another Ridesharing company.

Thanks for coming along for this ride… check out my books How to Be a Lyft and Uber Driver – The Unofficial Driver’s Manual to learn how I consistently average over $24 dollars gross income per hour.

My book Driving for Uber and Lyft - How Much Can Drivers Earn? provides easy-to-follow, step-by-step math to determine if giving rideshare driving a try makes sense for you… for your unique situation.

Arcade City – The death of Uber, Lyft, Didi and Airbnb and all Gig companies

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Uber Lyft Competition – Can the Big Boys be Beat?