In this week’s round up, senior RSG contributor John Ince covers a fascinating story on how Uber allies with some unsavory car dealers in New York. As much as Uber would like to change the negative narrative, it looks like it still has a ways to go. That said, could drivers possibly have some input into future changes at Uber? And could we all potentially receive Uber equity? Share your thoughts on what you’d like to see out of Uber below.
Sum and Substance: Geovanie Rosario signed the lease because it was easy. Tower Auto Mall came recommended by Uber, as one of four dealers the ride-hailing company partnered with in New York City to offer “flexible and affordable” rentals and lease-to-own contracts to drivers.
Rosario went to see Tower one morning in May 2016 and started driving a black Lincoln MKS, New York City’s standard car-service vehicle, a week later. His contract included a $3,000 service fee and weekly payments of $495 for 159 weeks, or just over three years. Tower would take the payments directly out of his Uber earnings every Monday.
Rosario had quit his position as an assistant manager at Rent-A-Center, a job with benefits and a 401(k), to drive for Uber in March 2015. Rent-A-Center paid $12.25 an hour, and, based on Uber’s ads, he figured he could double that by becoming a driver. He had tried a couple of car rental options and, by the time he went to Tower, felt confident he could make enough to come out ahead.But a month into his lease Rosario fell ill with pneumonia. He tried to keep driving, worried his payments would pile up, but he couldn’t control his cough.
With no health insurance, it was hard to get treated, and what little money he did make went straight to his lease. It was late June when Rosario felt well enough to start working full-time again. By then he was $1,800 in debt. When he tried to start up the Lincoln, its alarm sounded. “That’s when I realized they’d turned the car off,” Rosario said. He called Tower to ask why the dealer had remotely deactivated his vehicle. “They said, ‘You have to make a payment.’”
Uber upended the global, $100 billion taxi market, achieving a valuation of nearly $70 billion, with an app that hails a car at the touch of a button. But the company still struggles to recruit and retain the more than 1.5 million drivers worldwide who make that business possible.
The auto dealers Uber partners with target people with poor credit who otherwise might not be able to buy a car or get a loan. It has attracted them with hefty signup bonuses and the promise of good pay, then cut rates and increased its own commission. It has advertised “being your own boss” but glossed over the fact that independent contractors don’t get benefits or a guaranteed minimum wage.
Uber has been sued repeatedly by drivers who allege they were misclassified as contractors rather than employees. It settled with the US Federal Trade Commission earlier this year for misleading drivers about their potential earnings. It paid back tens of millions of dollars to drivers in New York City in May after admitting it for years shortchanged them on wages.
In recent months, Uber’s treatment of drivers has been almost completely forgotten amid a series of internal scandals. The company has lost nearly a dozen top executives so far this year, including founder and CEO Travis Kalanick, following multiple allegations of sexual harassment and workplace misconduct. It fired more than 20 employees as the result of a harassment probe in early June. Kalanick stepped down on June 20 after five major shareholders demanded his immediate resignation. He has retained a seat on Uber’s board of directors.
As it desperately tries to right itself, Uber has turned to its drivers, long a source of its harshest criticism. The same day Kalanick resigned, the company launched a campaign to improve the driver experience, titled “180 Days of Change.” But some of its past practices towards those drivers might be difficult to untangle…. “There’s no question that they’re doing it for driver retention.” said Matthew Daus, a partner at law firm Windels Marx and former chair of the New York City Taxi and Limousine Commission (TLC), after reviewing one of the leases obtained by Quartz for this story. “You have an arrangement where an independent-contractor driver’s hands are being tied to prevent them from going somewhere else.”
None of the three lease-to-own contracts that Quartz examined for this story explicitly instructed the leaseholder to work only for Uber. But in all three cases, the driver was required to agree to some form of payment deduction from his Uber earnings as a term of the lease.
My Take: Uber’s relationship with shady financiers is a side of the business that hasn’t gotten much media attention largely because there are more sensational things to cover. Sexual harassment allegations generally trump spreadsheet analysis.
But this side of Uber’s business warrants closer scrutiny, and this article does just that. It’s true that some of these car loan deals in New York are a lifesaver for people with no or bad credit, but it also makes indentured servants of some of those same people. The terms are often difficult to understand, and drivers get suckered in without realizing what they’ve signed up for.
I’ve studied debt issues in depth and even made a feature length documentary on the subject. Uber is in cahoots with shady financing parters. Together they’re taking taking advantage of the disadvantaged just like payday lending shops get away with usury. Glad this article appeared. It’s worth a serious read.
What Drivers Want Out of the New-and-Improved Uber [The Ringer]
Sum and Substance: Uber has pledged to redouble its efforts to appease drivers under new leadership; these are the changes drivers would like to see most. …
For years, Uber and its ridesharing ilk like Lyft have negotiated a delicate balance between the needs of passengers and drivers. By and large, the companies have determined that the customer is almost always right. But recent big changes at Uber, such as a pledge to launch more driver-first features and the ouster of the company’s hawkish CEO, have some drivers hopeful that the ridesharing giant’s favoritism will finally swing in their direction.
Last week brought big changes to both Uber the product and Uber the company. On Tuesday, the company announced it was launching a 180-day campaign to improve the driving experience every month, starting with adding a long-requested tipping feature within the app. A day later, Uber cofounder Travis Kalanick offered his resignation as CEO, capping a tumultuous seven months that have included sexual harassment allegations against at least one company executive, Kalanick’s appointment to and defection from a White House advisory council, and an ongoing public airing of Uber’s dirty laundry.
It’s hard to imagine the arrival of a driver-centric Uber and the departure of its CEO are not linked … of the five drivers I spoke with for this story, the one hang-up they all came back to was more abstract than additional filters or a change in ratings parameters. In short, they think Uber simply isn’t on their side.
Drivers feel that in a dispute over fare price or quality of service, Uber allies with the passenger far too often. In a service mediated by wonky GPS technology and cellphone calls taken on chaotic city streets, miscommunication can be common, but the company usually says it’s the driver’s fault if something goes awry. “Uber was founded by guys who wanted to improve the passenger experience,” Campbell says. “It wasn’t founded by guys who saw what it was like to be a taxi driver and saw how terrible it was and wanted to make that better. … It’s a very passenger-centric company.”
Uber’s change of heart isn’t some kind of sudden moral revelation. The ridesharing giant is trying to juggle three constituencies — employees, drivers, and customers — who have all found reason to reject the company’s ruthless, disrupt-or-be-disrupted culture.
Just like passengers can dump Uber in favor of Lyft, so can drivers. Many end up driving for both, casting the companies’ differing approaches to driver retention into stark relief. And when drivers quit, ridesharing companies have to spend lots of money to lure in new ones, offering starting bonuses that sometimes exceed $1,000.
“Really at this point, it’s almost getting to the point where they could add anything and I still wouldn’t care,” says Jason Saunders, a 43-year-old from Laguna Hills, California, who began driving with Uber a year ago but has since gravitated toward Lyft. “It’s kind of too little, too late. Lyft has had all this stuff.”
My Take: Okay, here’s kind of a fun exercise. The author of this article went out and spoke with five drivers to get their view on what they would do if they were running Uber after TK’s departure. With over half a million page views on this blog, we’ve got a much larger audience and a fair amount of influence in the rideshare community. Although I can’t be sure, my strong suspicion is that Uber execs and some investors read this blog regularly.
So here’s your chance: Imagine you’re in a focus group and the new people running the show at Uber want your opinion. What would be the top 5 things on your to do list?
Uber is exploring a way to repair its relationship with drivers: equity in the $69 billion company [Business Insider]
Sum and Substance: Uber has met with the SEC about the possibility of giving drivers equity in the company, according to an Axios report, citing an anonymous source. Drivers are contractors, not employees, and if the SEC were to agree, it would set an important precedent for other gig economy companies.
For Uber drivers, equity in the fast-growing startup could provide a valuable perk. The privately held ride-hailing company is currently valued at roughly $69 billion and is considered a candidate for what could be a blockbuster IPO in the coming years. The move comes at a time when Uber is making a big effort to repair what has been a rocky relationship with its drivers.
But there’s no guarantee that Uber will be able to make a driver equity program work. Ride sharing company Juno attempted to give its drivers stock option, but after complications with SEC regulations granted drivers RSUs instead. When the company sold to Israel based Gett, a statement from the company informed drivers that instead of the RSUs they were originally granted, they would receive a one-time payment that in some cases was as small as $100. … Uber declined to comment.
My Take: I would very much like to believe that TK’s departure from Uber signals a fundamental and genuine shift in thinking and values. But Uber is a company owned by investors who want a profit. Many of these investors have a fiduciary responsibility to their investors to get what they can out of this venture.
So let’s not deceive ourselves. Given Uber’s less than forthright relationship with both drivers and the press, I put very little credence in this story. It’s a tantalizing story line; the promise of giving drivers equity gave Juno a lot of traction in New York City. However, look what happened there – drivers got peanuts.
If Travis Kalanick adamantly refused to put the tipping option in the app for all that time, why would the same guy – who still controls the majority of the voting shares (with co-founder Garrett Camp) – even consider diluting his stake in the company, with all the legal hassles that go along with that? Nope, this story strikes me as a plant designed to perk up driver interest as part of Uber’s 180 days of change – or was it 180 degrees of change? – initiative.
Is Uber the MySpace of ride-hailing companies? [Mashable]
Sum and Substance: Uber is forever changed. Co-founder Travis Kalanick was forced to resign as CEO after pressure from investors over recent scandals. Those scandals? Where to begin: There are the allegations of sexual harassment and HR incompetence from Susan Fowler Rigetti. There’s the ongoing lawsuit from Alphabet’s Waymo that alleges Uber benefited from intellectual property that the now-fired head of self-driving may have stolen. There’s the Greyball program that the company used to evade regulators and is now being investigated. There are the reports that Uber’s leadership team obtained and viewed the medical records of a rider in a rape case. There’s…
You get the point. Uber has been been having a terrible, horrible, no good, very bad year. But does the exit of Kalanick — who had been on leave from the company and will remain on the board — signal a new direction for Uber? On this week’s MashTalk, Pete is joined by a panel of Uber experts, including Farhad Manjoo from The New York Times, JP Mangalindan from Yahoo Finance, and Kerry Flynn from Mashable’s business team to answer that very question.
Also up for discussion: What kind of person should lead the company next? What about the internal petition to reinstate him? Will Kalanick’s downfall change Silicon Valley startup culture at all? And, if you’re an Uber user, what should your takeaway be from all this?
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My Take: For those who like podcasts, this might be a good way to spend 45 minutes. Play the podcast while you have passengers in the car to get their reactions. For the most part, the guests on the podcast seem to be rehashing the same news we’ve been covering in this blog for the last few months, but it’s still enlightening.
Latest posts by John Ince (see all)
- Uber Backers Discuss Stock Sale to SoftBank, Others - July 22, 2017
- So Where Does Uber’s Value Come from Anyway? - July 15, 2017
- Inside Uber’s Unsettling Alliance with Some of New York’s Shadiest Car Dealers - July 8, 2017