Tim O'Reilly explains how self-driving cars will bankrupt Uber

Tim O'Reilly (previously) is my kind of technologist: someone who goes past the "is technology good or bad for us?" question and dives into the really meaty, important question, namely: "how can we make technology better for us?"

O'Reilly, who wrote the first paper documentation for Unix and parlayed that into a successful publishing, conference and online learning empire, is a hero of multiple generations of technology (he coined the term "Web 2.0") and his latest contribution to the discourse is WTF?: What's the Future and Why It's Up to Us, a wide-ranging book about technology, inequality, power, agency, and that all-important question: "How can we make technology safe for the world, and vice-versa?"

The book comes out next week, but you can get a preview of it in this interview with the Press Democrat, which is full of sharp observations. The one that leapt out at me? The fact that self-driving cars stand a better chance of bankrupting Uber than they do of giving it an immortal monopoly.

If you actually understand the business model of Uber and Lyft, you realize how fatuous much of the analysis is of the impact of driverless cars on these platforms. Why have they been able to be so much more effective than taxi cabs? The reason is they are using part-time drivers supplying their own cars, which means the number of cars they have scales automatically to meet demand. When there's a lot of demand, there are many more cars. When there is not much demand, there are fewer cars. Their expenses go up and down. Now imagine they have all autonomous cars on the road. They have to have enough cars to meet that peak demand. You see these statements that they won't have to pay drivers anymore and the cars will be fully utilized. No, the cars will be very lightly utilized because they have to have enough cars for peak demand. It only works if those autonomous cars belong to someone else who will take on that risk. If they put the cars on their balance sheet, they are going to have lower utilization, they are going to have all the costs, and the business will be actually worse.

WTF?: What's the Future and Why It's Up to Us [Tim O'Reilly/Harperbusiness]

Tech innovator Tim O'Reilly: Don't fear technology, robots or the future
[Bill Swindell/Press Democrat]

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