Uber Isn’t Selling Rides, It’s Selling a Challenge to Our Belief System
A few years ago, that great business thinker George Carlin shared one of his trenchant insights. Carlin posted that much of life was about the accumulation of “stuff.” For instance, a house is merely a pile of stuff with a cover on it.
Carlin’s observations were funny, but they also had some truth to them. For instance, do we really need to own cars? After all, they are rather expensive to maintain and house. About 100 years ago, no one owned a car, but most people got around and visited their relatives without having to pony up thousands of dollars and attach a garage to their homes. The average cost for a new car was $36,270 in January, which was up 4 percent over the year before, according to Kelley Blue Book.
In light of such costs, many consumers may want to ponder Carlin’s position. After all, if one decided to use Lyft or Uber for most transportation needs and forego buying a car, then one would arguably save money.
Alas, the math isn’t that simple. AAA calculated last year that if you drove 10,841 miles annually that you would spend $10,049 a year. If you relied on services like Uber and Lyft, then you’d spend over $20,000 a year, according to KBB.
But that estimate doesn’t take into account the cost of repairs or a garage. Plenty of others have done the math and decided that they come out ahead by Ubering or Lyfting.
This movement isn’t just among tree-hugging bloggers though. Lyft went public on March 28, raising $22 billion. At one point, Lyft’s stock price has swooned to about $18 billion. Critics of Lyft point out that it’s much smaller than rival Uber, which went public on May 10th.
The sharing economy
While I’m not going to predict what Lyft or Uber’s stocks will ultimately be valued at, allow me to assess the sharing economy: It makes total sense for goods that are not disposable to somehow be shared and in an economically viable way — and Uber and Lyft are.
These are some of the great inventions of my lifetime. Airbnb is another really good example of people being able to arrange lodging or long-term stays without signing a lease, as is Rent the Runway, which I don’t use, but it allows you to get something new to wear to a black-tie affair without having to buy another outfit. I hope that people will realize that they don’t need to own as much stuff and they don’t need to buy bigger and bigger houses to store more and more stuff.
My hope is that the sharing economy will show people that they may actually be happier with less stuff, which would be good for the environment. People have apartments or homes or condos that they can lease out for short periods for the greater utility of the world. Hopefully, it will lower the world’s waste production and the world’s carbon footprint. It can also get people more variety, which should improve their lives.
As for the economics, Uber and Lyft may need to raise their prices a bit to be more economically viable as companies. Yet relying on ridesharing instead of car ownership may still be more economical for many people.
The great truth that Uber and Lyft have brought to us is that people actually need fewer possessions. If they can get easy access to rides, clothing, or vacation homes then they can avoid the headaches that come with ownership. Right now, we’re in the early innings, but Uber and Lyft have proved that there’s a market for what they’re selling.
That will be true in the future, too. Places you book with Airbnb could become much more standardized. Things like jewelry could become less owned and more rented. We could experience more and be less cloistered by our possessions.
That’s why Uber and Lyft’s real innovation has nothing to do with cars. Instead, it’s a challenge to the American belief that puts emphasis on ownership. Until recently, renting goods was far from the ideal. But what if Carlin’s right and all we really need is a small place for our stuff. We can rent the rest.
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