Harry here. Uber made headlines yesterday for adding a tipping option and now we’ve learned some more HUGE news. Today, senior RSG contributor Christian Perea takes a look at what Travis Kalanick’s departure will mean for drivers.
Travis Kalanick has resigned as Uber’s CEO. It was first reported by the New York Times last night at 10:30 pm. Right before I went to bed. I imagine him smiling at the idea that all of the journalists and bloggers who plagued him the last few years were now going to have to stay up extra late to write an article all about HIM. A parting gift left on my doorstep in a brown paper bag.
Frankly, I was already surprised by the other big news from yesterday: that Uber will be rolling out a tipping option and other substantive changes to drivers’ earnings. I thought good news like that didn’t come along every day in the world of rideshare but I guess some days it comes twice.
Travis Was The Face Of Uber (And All It’s Problems)
When people think of Uber, a lot of them think of Travis Kalanick. Everything that has happened with their upward trajectory and downward spiral has been attributed in one way or another to him. He is the biggest target for many (justifiable) reasons when it comes to Uber’s mishaps and aggressive culture over the last few years. And at the end of the day, Uber’s investors saw this and that is why they demanded his resignation.
Simply put, Uber cannot shed its negative public image with Travis as the literal brand of the company. It’s hard to change your public image when people associate “evil tech bro villain” as the brand of a company. So instead Uber had to shed Travis.
Even though Travis created work opportunities for millions of drivers, drivers have never been big fans of the CEO. You can see the reaction from drivers on our Facebook page but it seems like most drivers think the company and their experience as a driver will be better without him.
What Does It Mean For Drivers?
It’s important to consider that whoever replaces Travis will be focused on getting Uber to profitability and an eventual IPO now that investors have exerted more control on the board and the company itself. This will be the biggest factor in determining how drivers will be affected.
Uber has a systemic turnover problem with drivers. They constantly have to recruit and refresh their supply of drivers as old drivers quit. And if that cost is a substantial part of that $708 million that Uber lost last quarter, then it is likely that a new CEO and Uber leadership will focus on reducing their “replace half my driver fleet ever year” expense. It’s hard to say that would result in raising prices/rates for drivers though because Uber also really wants to hold on to the volume of rides they are giving (about 15 million rides a day).
More likely, they’ll continue to take a larger cut of each fare as they announced recently.
How Things Could Get Better For Drivers
This could definitely signal the beginning of a more positive attitude towards drivers. At the very least, it shows a serious attempt to make big changes. Travis’ team put passengers first and although that was smart in many ways to grow the business, it often came at the price of hurting drivers. New leadership has already started to recognize this and put more changes in place that makes Uber better for drivers in the long run.
We saw this yesterday with the launch of the “180 Days of Change” where tipping was announced. I don’t know if we’ll ever see increased rates again but there are still lots of opportunities to improve the micro pain points drivers face on a daily basis. Things like customer support, ratings system and UberPOOL all need to be re-vamped in a way that improves the driver experience.
How They Might Get Worse
Whoever replaces Travis will be under a lot of pressure to stem losses and bring the company closer to profitability for a potential IPO. This might result in less Quest/Boost pay for drivers, or a rate increase that doesn’t include extra pay for drivers.
Remember, the rideshare space is still quite young. Uber is missing a lot of key leadership positions and the wrong CEO could do a lot of damage to the company and thus to drivers. For all we know, we may end up with a less driver-friendly CEO. Although I think that is unlikely.
What Does it mean for Uber?
Uber is still losing a lot of money each quarter. Last quarter they were lauded for narrowing their losses to $708 million in Q1 of 2017 after losing $991 million in the previous quarter. Somewhere along the way Uber has to start making a profit and it is unclear how that will happen. One of the reasons investors clashed with Kalanick so often was because of his unwillingness to prepare the company for an IPO.
I think the first step will involve Uber trying to radically change its brand and public perception. This will involve policies that are less focused on growth and more focused on the sustainability that will allow them to eventually report a profit and IPO. So this probably means that the new Uber will be more conservative, corporate, and kind of bland. I imagine that the company will want to avoid having a repeat of a situation where a single individual in the company gets painted as a target.
Who’s In Charge Over There?
Right now, Uber is seeking a new CEO, COO, CFO, President of Product, President of Rideshare, and some other major positions that I have honestly forgotten about. And the company is currently being run by a committee of executives like Daniel Graf, Rachel Holt and Thuan Pham.
Travis will be leading the search to fill his old position as CEO. He also still has a lot of power on the board and that translates to the ability to control a lot of what happens at the company. Even if he is removed from the day-to-day operations of the company. It will be interesting to see how that plays out.
For Now: More Questions Than Answers
The big question is who will replace Travis and who will take up these unfilled leadership positions at Uber? How will the new leadership move Uber to retain their market competitiveness but with a softer, friendlier touch? And how will that get them to profitability?
With Travis Kalanick, Emil Michael, and others gone there is a lot of room right now for the company to change. We just won’t know how it all plays out until later.
Drivers, what do you think about this latest news? Will Uber be better without Travis?
-Christian @ RSG