For Uber to Succeed, It Needs to Grow

In this week’s roundup, Uber is facing existential threats – from stock prices to pending legislation, what does the future hold for Uber? Senior RSG contributor John Ince tackles that question and more below.

UBER AND LYFT FACE AN EXISTENTIAL THREAT IN CALIFORNIA — AND THEY’RE LOSING [The Verge]

Sum and Substance: On August 29th, Uber and Lyft released a dramatic, unexpected proposal as a last ditch effort to derail legislation in California that could potentially explode the ride-hailing industry. In their proposal, the companies promised to pay their drivers $21-an-hour (but only while on a trip), provide them with sick leave, and “empower” them to “have a collective voice” — a nod toward drivers forming a union.

The proposal “will both protect drivers’ ability to work on their own terms, while maintaining the reliable rideshare experience you’ve come to depend on,” the petition states. It will most likely fail.

State senators in California are poised to vote on Assembly Bill 5, which would make it more difficult for so-called gig economy companies to classify workers as independent contractors. If passed, the bill could force Uber and Lyft to designate drivers as employees, a move both companies admit could throw them in a tailspin into the unknown…

The companies have sent their high-priced lobbying teams to Sacramento to persuade Governor Gavin Newsom and lawmakers that AB5 will ruin their ability to do business in the state. But they have now “all but accepted that AB 5 will pass and the governor will sign it,” according to the Los Angeles Times.

My Take: It’s a long long road. Where are these companies headed? No one knows for sure, but it sure looks like they’ve got something up their sleeve. No one knows what exactly they’ve got, but one thing is for sure – they’ve got something that will put the fire out. Right? Well, I hope so… because if they don’t it means that Uber and Lyft are done.

How Uber Got Lost [The New York Times]

Sum and Substance: This article is adapted from the book “Super Pumped: The Battle for Uber,” by Mike Isaac, a reporter for The New York Times. The book will be published by W.W. Norton & Co. on Sept. 3.

“From the beginning,” the blog post began, “we’ve always been committed to connecting you with the safest rides on the road.”

It was April 2014, and Uber was announcing a new $1 charge on fares called the Safe Rides Fee. The start-up described the charge as necessary to fund “an industry-leading background check process, regular motor vehicle checks, driver safety education, development of safety features in the app, and insurance.”

But that was misleading. Uber’s margin on any given fare was mostly fixed, at around 20 to 25 percent, with the remainder going to the driver. According to employees who worked on the project, the Safe Rides Fee was devised primarily to add $1 of pure margin to each trip. Over time, court documents show, it brought in nearly half a billion dollars for the company, and after the money was collected, it was never earmarked specifically for improving safety.

My Take:  This article, like the stock itself, is a mystery. They have to consider whether it’s a product that has a demand. Of course there’s a demand… right?  

No. You see, the demand is for a product that has a way of selling itself. Wait, it can’t be selling itself because they’re losing money. I don’t get it. Uber is not a typical company – just look at their balance sheet. They lost $5 billion. So what’s so special about Uber?

Uber’s Nightmare Has Just Begun [Forbes]

Sum and Substance:  “Never get in cars with strangers…”

Did your parents tell you that when you were a kid?

These days, people get in cars with strangers all the time… only they use a smartphone “app” to match them with a specific stranger to drive them around.

As you may have guessed, I’m referring to Uber, the world’s biggest ride-sharing company.

It’s like a taxi company except it doesn’t own any cars. It doesn’t employ any drivers either. Instead, it runs an app that connects drivers with people who need a ride.

Since 2009, Uber has grown into a hundred-billion-dollar company. It’s become so big and popular that it’s hard to imagine the world without it.

Hardly anyone “takes a taxi” anymore. Everyone “Ubers”…

The most-hyped IPO since Facebook…After years of extraordinary growth, Uber launched an IPO on May 10.

An IPO, as you may know, is when a company first sells shares in the public markets. It marks the first time individual investors can buy the stock.

Uber’s debut on the stock market was one of the most hyped financial events since Facebook went public in 2012.

It was on every financial TV. The headlines screamed “this is the next Facebook.”

Everyone was talking about it… I even heard stories of people putting half of their savings in this single stock….

My Take: Where do you see the stock price of Uber headed?  Do you see it as a stock that will justify its price over time or not? It’s that simple. I don’t see this as company that will justify its price.  I see it as a company that will require increasing attention.   

Here’s the problem:  Uber doesn’t have the discipline. They find a problem – like $200,000 on balloons on birthdays.  It could be something else.  Whatever the problem, the company has to find a solution.  And they have to do it over and over.  

Older People Need Rides. Why Aren’t They Using Uber and Lyft? [The New York Times]

Sum and Substance: Seniors need transportation alternatives more than ever, but many are intimidated by ride-hailing apps. …

Martin Gerstell treasures his Thursday morning volunteer stint at the National Gallery of Art, where he fields questions at the main information desk. He patiently responds when visitors ask about the current exhibits, whether the paintings are real, where the bathrooms are.

Usually, fellow volunteers give him a ride from his assisted living residence in northwest Washington to the museum downtown, and home again. But when they can’t, Mr. Gerstell, 94, uses the Uber app his granddaughter installed on his iPhone.

“They appear very quickly, and they’re very helpful,” Mr. Gerstell said of his Uber drivers, who fold and stash his walker in the trunk. Summoning a taxi, his previous option, usually took 15 to 20 minutes; Uber arrives in three to five minutes and charges less, under $20, to drive him downtown.

My Take: Just curious – how many of you drivers find yourself transporting seniors, say over 50, with some frequency? For me driving in the Bay Area, it was a rare, but usually pleasant experience.  Older people are usually more conversant and appreciative than younger millennials who by and large now take the whole thing for granted. 

The article makes a good point. I certainly hope more older people start using the service more.  Everybody benefits.

Readers, what do you think of this week’s roundup?

-John @ RSG