Uber may be about to change the name of its controversial “surge pricing” practice, in which the private car service increase its rates in times of high demand. Delivering a keynote speech to an audience of 2,000 people at Washington DC’s Warner Theater for DCWEEK last night, Uber founder Travis Kalanick defended surge pricing and said with a wry laugh, “Although I think we may have to change that name.” It was unclear how serious he was.
Paul Carr spent much of last week berating Kalanick and Uber, especially when it doubled the rates it charged customers in the immediate aftermath of Hurricane Sandy. Facing a backlash from users, Uber hurriedly returned its rates to usual levels and waived its fees, swallowing what it claims was a $100,000 loss in the process, only to re-institute surge pricing a day later. The company claimed the surge pricing ensured Uber drivers, who are independent contractors, would be motivated to get out on the roads.
By contrast, Airbnb waived all its fees on the 20,000 short-term rental listings available in the areas affected by the hurricane, and it highlighted hosts that were reducing prices for stranded travelers and locals. Today it released a directory, built in conjunction with the City of New York, to make it easy for people to find hosts who are offering their places for free.
Kalanick said Uber uses surge pricing to ensure steady supply and “lasso in uncontrollable demand.” If it didn’t introduce such controls, he said, Uber would become “like most cities’ cab systems.” He meant inadequate. “We are always a reliable ride,” he said.
Kalanick also took the opportunity to make the case against regulations that are hampering Uber’s business. ”It’s hard out there,” he said. “You’re talking about an industry that literally hasn’t changed in decades.”
Much of the problem comes down to relationships between lobbyists and legislators, he said, naming regulatory difficulties in Cambridge, Massachusetts, New York, Chicago, and Washington DC as sore points. “When you have those kinds of protectionist measures in place, the system just sucks,” he said. “You feel like you’re in a developing world, basically.”
Earlier in the talk, Kalanick celebrated Uber’s 26 percent month-on-month growth and presented a graph to show what that steep curve looks like. ”I could say lots of fun stuff,” he added, “but then I get misquoted and somebody makes me sound like a bad guy.”
We requested an interview with Kalanick in DC – once by email and then once backstage after his speech – but he declined.
Meanwhile, Uber doesn’t seem to be backing off its surge-pricing strategy one bit. Yesterday, as snow fell on a still-recovering New York City, the Wall Street Journal’s Tom Gara Tweeted that Uber had increased its prices by 2.5 times.
It’s snowing, so Uber is getting its gouge on. twitter.com/tomgara/status…
— Tom Gara (@tomgara) November 8, 2012