by Andy Tillman
CES® 2016 at UCLA Anderson zoomed to life with a transportation theme that featured panels of industry professionals, faculty and students who shared dazzling insights on all things Next.
UCLA Anderson’s own Keith Chen, associate professor of economics and head of economic research for Uber, was first to take the stage. Known in academe for blurring the lines between economics, psychology and biology, Chen may be best known in the wider world for his design of Uber’s now famous “surge” pricing model.
For those who’ve been relying on a unicycle as their primary mode of transportation for the last five or so years, Uber is the alternative that turned paid transportation models on their heads, nearly driving the taxi industry out of business and in the process disrupting the entire transportation space. This is thanks in large part to Chen’s surge pricing model, which is based on the simple law of supply and demand. Surge calculates a higher fare for rides in certain geographic regions identified by a combination of mapping technologies to create spatial grids that provide a dense view of the world. This allows Uber to break the whole wide world into manageable grids so that when demand is high in a certain area, rates increase and drivers earn more per ride. Riders have the choice to wait out the “surge” in price by staying put or to accept the higher fare.
Perhaps the most important disruption caused by Uber’s surge pricing model is its effect on the traditional nine-to-five work day. The median Uber driver works fewer than 15 hours a week with an average driving session lasting 2.5 hours. For most, it’s a second job. Drivers use this flexibility to dramatically increase their hourly rate by doing what is called “surge surfing,” choosing to work during times and in areas where per-customer rates are highest based on demand. If Uber is the test for a shorter work day, then perhaps those 40-hour weeks of old will soon be a distant and shrinking concept in the rearview mirror of progress.
This is raising eyebrows in a lot of sectors, causing more working people to reconsider their work-life balance and leading to a lot of push-back from the government, competitors and those whose business Uber’s model is hurting — which, considering Uber recently launched in China, is pretty much everywhere except Antarctica, the only piece of land on the planet not covered by Uber’s unique mapping system. But if you’re as persuaded by Uber and Chen as we are, then rest assured, it’s only a matter of time.
CES at Anderson is presented by the Easton Technology Management Center and the High Tech Business Association in partnership with the UCLA VC Fund, UCLA Anderson Office of Alumni Relations, UCLA Law School Alumni Network, UCLA Engineering Alumni Association, and UCLA Anderson Marketing & Communications.