Sam says that even with driverless cars, he's not sure it can still make any money. There's no networking effect. There's no loyalty or switching costs. So the only way to make it work is to have a lot of drivers and lower fares. Also, companies like Lyft and Uber have no real hard costs or assets. They don't own the cars, or have to maintain them or even pay for the gas. When you go driverless, suddenly you have to pay for cars and maintain them. Those are hard investments and will be in the billions at first.
Lyft went public this week, and on shares, it was worth $23 Billion. Leo thinks that Wall Street is banking on a future when these ride-sharing companies will have driverless vehicles. Until then, Lyft has to share the fare with its drivers and even subsidize nearly 40% of what cabs would normally charge. But once driverless cars are the norm, Wall Street believes the profits will come. But the real question is, would you get into a driverless car and trust that the computer will get you to your destination safely? Especially with other human drivers on the road with it?
Lately, Johnny Jet has been frustrated with Uber and Lyft drivers that are late, and have no room to stow his luggage. So he's starting to use Blacklane. It's about two to three times more expensive, but it's more of a limo service with professional drivers. It's all around the world and they use roomy cars. They show up early and wait for you, not the other way around. And you can use your phone to order it.
Johnny Jet joins us from a Ritz Carlton ski resort in Colorado this week.
Travel Tip - Flying into Seattle offers a very organized and helpful management of Uber and Lyft pickup. There's also wingz.me. What makes them different is that there's no surge pricing. If you prebook, you'll get the same price and you can request the same driver over and over. It's available in 14 cities. Another tip for using Uber: when you see the price surging, just wait a few minutes. It will eventually fall back down.