Four years ago, Ben Gilbert was a symbol of Seattle’s rapidly expanding transportation options. The tech investor and entrepreneur had ditched his car at the time, opting to go “full Uber” and embrace emerging ride-hailing and car-sharing services.
Now Gilbert, co-founder of Pioneer Square Labs, is the owner of a new used car, and by getting back behind the wheel he’s a symbol again, this time of the uncertainty that can come with relying on experimental startups for vital services like getting from place to place.
In a mini tweet storm this week, Gilbert shared an update to a 4-year-old piece he wrote for GeekWire headlined “How I ditched my car and went full Uber.” In that 2016 story, Gilbert detailed how he was able to save money by getting rid of his Honda Civic while relying on other modes of transportation instead.
Back then, Gilbert cited the “magical things” that made going carless work, not the least of which was the “honeymoon phase” of ride-hailing at the time, as Uber and Lyft were offering crazy incentives to get customers to integrate their services into their daily lives.
But in changing his lifestyle in 2020, Gilbert cited the shutdown of ReachNow, car2go’s exit from the U.S. and more as he jumped back into car ownership, and a 2008 Honda CR-V.
Update: after four and a half years, I bought a car. Factors:
– Activation energy required to go on hikes+trips is high w/ rented cars; I did less
– ReachNow shut down
– Car2Go is leaving the US
– Uber/Lyft *seem* to have gotten more expensive (and will continue) https://t.co/GyT28n3MiD— Ben Gilbert (@gilbert) January 29, 2020
Let's dissect each of these:
1) There is a natural "tax" to renting access to an asset vs. owning it. In this case, that tax was paid both in an increase in the marginal cost of a trip, but also an "unhappiness tax" with the added friction of getting to the rented car.— Ben Gilbert (@gilbert) January 29, 2020
2&3) These services were subsidized by their parent companies for a decade and couldn't make the economics work. You could say, "double the price!" I assume that price elasticity was high, and they wouldn't create the demand necessary for the fleet's fixed cost at higher $$.
— Ben Gilbert (@gilbert) January 29, 2020
4) Investors notoriously subsidized the ride sharing companies for years to keep consumers interested. Uber and Lyft are now public, have less access to capital, and have no option but to get their unit economics in order to get to profitability.
— Ben Gilbert (@gilbert) January 29, 2020
Other things that made the economics more favorable this time around:
1. I got a sweet '08 CRV AWD – not much depreciation ????????
2. I live in an area with street parking
3. I signed up for @metromile, so premiums are by-the-mile, ideal for how much I drive (still not much)— Ben Gilbert (@gilbert) January 29, 2020
In an email exchange with GeekWire on Friday, Gilbert said he is still bullish on the future of ride-hailing, though he believes prices will continue to rise and consumer expectations have been “mis-set” to date.
“In what was perceived to be a land-grab opportunity, investor dollars flowed into these companies to try and achieve global or national dominance,” Gilbert said. “In reality, there are less cross-geography network effects (and therefore less of a ‘winner take all’ opportunity) than investors thought. This means that companies had to compete aggressively for market share for longer, and the ‘pot of gold’ from winning in these markets will be smaller and less durable than everyone hoped.”
Gilbert believes that at the end of the day, this means that consumers will have to pay more, so ride-hailing will be a piece of the puzzle for their transportation habits — not the near-exclusive means of getting around like he had hoped years ago when he ditched his car.
Others backed Gilbert’s rationale, and echoed some of what we heard from car-sharing fans when the car2go news broke:
Tracking with you 100% on this. Used to be a car2go + ride-hail family, but the golden era of massively-subsidized car sharing is coming to a close.
— James Reggio ????????????️???? (@jamesreggio) January 29, 2020
This! The rational side of me knew the cost calculus was cheaper to rent. But, I still ended up foregoing short trips because I would compare the cost with other things I could do *that* weekend. Locally maximal, but worse overall outcome. Humans are irrational it turns out ????♀️ https://t.co/h0DAlhOBcP
— Krithika Muthukumar (@krithix) January 29, 2020
Despite calling 2020 a step backward for transportation innovation — at least in Seattle — Gilbert still thinks the system as a whole is working. The crazy ideas of founders and startup teams working on problems, and investors taking risks on funding, has led to better options overall.
“Business owners learned a lot about what solutions can succeed, and consumers benefit from those that consolidated or survived,” Gilbert said. “Without the willingness to take risk, we wouldn’t have two companies in Uber and Lyft that survive (I hope!) and incorporate all of the learnings across the industry. We also wouldn’t have the in-process experiments of Getaround, Turo, and others that provide a valuable (yet not perfect) service to consumers.”
And not all is lost in Seattle — Gilbert did say he’s very excited for the expansion of light rail in the region, calling it a huge step forward. But without a car and with a desire to get out of the city, Gilbert reached a recent transportation breaking point.
“I was all geared up for a hike, and I checked Getaround and Turo to realize all cars were a half-hour walk from home,” he said. “This would mean Ubering to one of those cars just to start my rental, and I ended up losing momentum and bagging the trip.”
Now, as a renewed car owner, he points to a great afternoon at Discovery Park a couple of weekends ago that he said would likely have otherwise been spent in his house.
“Certainly a win,” Gilbert said.