When Andrew Murstein hired pop music super star Nicki Minaj to headline his son Matt’s Bar Mitzvah, it was an unusually conspicuous flaunting of wealth by one of New York City’s leading taxi cab magnates. Newsweek estimates that Minaj might have been paid as much as half a million for the gig, which entailed taking a personal photo with every single boy and girl in attendance.
Andrew Murstein’s vast wealth derives from a shrewd decision that his grandpa Leon made 78 years ago. In 1937, New York City issued what ultimately amounted to 13,437 taxi medallions—a special kind of license that conferred the exclusive right to drive a cab in the Big Apple. And Leon Murstein bought one…for $10. And then he bought several hundred more to rent to other drivers.
From 1937 to 2013, the price of each of those medallions climbed from $10 to over a million dollars. Over the years, the city tried periodically to break the medallion cartel to make life easier on the riding public, but to no avail.
“Ultimately all that value that’s built up in the medallions comes from passengers,” says Josh Barro, a reporter with The New York Times, who covers the taxi industry. “Fares are higher than they otherwise would be able to be because you have to limit the number of people using these taxis.”
And then in May of 2011, Uber began operating in New York City. For the next roughly two and a half years, the taxi industry kept thriving. In November 2013, Medallion Financial, the publicly traded company that’s run by Andrew Murstein, saw its share price hit a thirteen-year high. But as more and more Uber cars took to the streets over the next year and a half, the stock plummeted, ultimately losing about half of its value.
The average number of trips taken in a cab each day has fallen and average farebox revenue has fallen. Taxi garages are jammed with parked cabs because they can’t find enough drivers to hire. They’d all rather go work for Uber.
“It really is remarkable how these monopolies that couldn’t be broken for decades were broken so quickly,” says Barro, “but I think it’s because of Uber moving first and saying, ‘we’re going show people how this thing can be different, and then we’ll have the fight over whether we want that different thing or not.'”
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7 minutes and 43 seconds.
Shot, edited, written, and narrated by Jim Epstein.
Music: “Lacera per calla” by Sergio (Creative Commons); “Bronco Romp” by Waylon Thornton (Creative Commons).
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