I’ve got to admit, I didn’t see this coming. The dots are so easy to put together, now with the benefit of hindsight.
Uber is annihilating the NYC yellow cab, an industry that has been very kind to middle class workers in the city for decades.
I know several taxi drivers who bought their medallions back in the 90s for a song, anywhere from 50-100k. Up until a few years ago, those medallions made them rich, with the price soaring above a million dollars. However, just like with stocks, some unlucky cab drivers bought sky high priced medallions into the hype, leveraged everything they owned to finance it, and are now facing the reality of ruin.
SBNY is a NYC bank, with strong ties to the taxi industry. Those chickens came home to roost today.
Lenders have pulled back support for the $15 billion New York City taxi industry, which has been weakened by the emergence of online ride-sharing services including Uber Technologies Inc. The value of a medallion sunk as low as $520,000 in March from $1.1 million in 2013, according to data from the New York City Taxi & Limousine Commission. Signature wrote off about $4.4 million of medallion loans in the first quarter, and expects the portfolio to worsen “for the next couple” of periods, the company said on a call with analysts.
Fascinating stuff, right? This is the best business in the world.
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How much does an Uber “medallion” cost? By the way, can I start up my own taxi cab in NYC and paint taxi on the side of it or will I be in the Hudson for doing that?
15 billion dollar industry just for taxi’s in ONE city? that should have been the tell. lol
These 3rd order effects (Uber->NY taxis->NY banks) are always fascinating. Figuring these out before they monetize is the key.
Uber and GPS also are killing off The Knowledge, the incredible feat of memorization that was, for many decades, required to become a black cab driver in London. Passing the series of tests was so difficult that it required years of full-time study and increased the size of the hippocampus in the learners.
In the age of GPS devices and other technology, The Knowledge had become overkill as a way of ensuring competent taxi drivers. Unfortunately, it means we lose one of the interesting bits of culture in the world, and we lose a reminder of just how remarkable determined humans and their brains can be.
http://business.financialpost.com/news/transportation/blame-it-on-uber-londons-largest-black-cab-school-to-close-as-intimate-street-knowledge-no-longer-a-prerequisite
http://www.nytimes.com/2014/11/10/t-magazine/london-taxi-test-knowledge.html
http://www.nytimes.com/video/t-magazine/100000003223621/applying-the-knowledge.html
https://www.youtube.com/watch?v=r2uITz3yw-M#t=290.470041
Taxi union influence can be that strong as to prevent modern high speed rail service from the terminal to downtown. The lack of such a service is seriously inefficient to the economy of a city. All European airports of significance have a train station underneath. Anyway, where I live its still not installed.
Interesting. I wonder if Uber will end up accidentally helping you to get that high speed rail service in your city.