Uber Has Seen a Sharp Drop in New Driver Retention

Harry here. With Uber including in-app tipping in all cities soon, will more drivers stay on the road and not quit or switch to Lyft? Senior RSG contributor John Ince covers the sharp drop in new driver retention by Uber, a new ruling on driver classification, and whether or not other rideshare drivers are to blame for accidents and drowsy driving. 

In this roundup, John Ince covers a drop in new driver retention, a new ruling on driver classification, & cities blaming rideshare drivers for accidents -

Uber has seen a sharp drop in new driver retention this year: Apptopia [Techcrunch]

Sum and Substance: Uber has seen a sharp drop in retention rates for new drivers in the U.S., according to analysis of the Uber driver app provided to TechCrunch by app analytics firm Apptopia. 

In an analysis of app downloads and usage, Apptopia estimates that 30-day user retention for the Uber driver app in the U.S. has dropped 47 percent from January through May. This measure looks at the proportion of users opening the app each day after the initial day of download — continuing until the 30th day… the idea being to measure engagement meaningfully versus looking at app deletions (as lots of people just stop using an app versus actively deleting it). Apptopia’s analysis also indicates a 20 percent bump in downloads of the driver app over the same period.

So — if the data crunching is correct — it appears that while Uber is successfully managing to drive initial interest from new drivers, it’s having serious trouble sustaining this interest. From April, retention rates appear to fall especially dramatically. Apptopia does not get any usage data direct from Uber but pulls data from a network of 250,000 apps to which it has developer account access. It then uses an algorithmic framework to generate estimates for individual apps, including by using public signals such as App Store reviews — and says its methods result in “strong trend data for major apps.” 

For the two percentages it’s pulling here, it says it’s averaging its data from the Google Play Store and iOS App Store together — for, as it puts it, a “more holistic view” on interactions with the Uber driver app. We asked Uber if it had any comment on the data, but at the time of writing it had not responded. It’s unclear whether new Uber drivers are sensitive to Uber’s internal turmoil. Perhaps more likely is general dissatisfaction with lower rates of pay from Uber pool rides and Uber’s lack of an in-app tipping feature (versus Lyft having in-app tipping) — tellingly, this week Uber finally said it will start allowing riders to tip drivers via the app.

Apptopia also looked at rider monthly usage for us, and on this said — perhaps surprisingly — that Uber hasn’t taken a hit due to #deleteuber — i.e. the social media campaign that sprung up aiming to convince Uber users to ditch the app as a result of the various ethical scandals being attached to it. “It drove uninstalls but new downloads remained consistent so usage didn’t dip much,” said Apptopia of the #deleteuber movement. “Since February, monthly usage in the US (for riders) has actually increased around 60%.

My Take:  Despite all the press about internal problems at Uber headquarters, driver churn will be one of the most critical issues confronting the new Uber CEO – whoever that might be. If Uber can’t keep drivers in the fold, then they have no business model.

Uber has been very protective of data that might reveal the extent of the churn problem.  Most of us observers have relied on anecdotal evidence or that one figure awhile back that indicated half of all drivers have gone AWOL within a year. But with an objective third party doing an analysis like this, suddenly we get the picture.

Demand is still there from passengers, and why wouldn’t it be with subsidized fares? But the driver side of the equation is problematic. Many drivers quickly conclude this gig simply isn’t what it’s cracked up to be.  Uber has demonstrated they can sign drivers up with aggressive advertising and incentives, but they can’t keep most of them satisfied.

But there’s another mystery here. Increasingly we hear complaints from drivers that their markets are saturated with drivers.  But new drivers aren’t opening the app. So the question arises, Why are all the core drivers – veteran drivers – still on the road? Stay turned for my follow up piece, “Why so many drivers are still in the game” on Monday.

Shares of a Publicly Traded Uber Might Be Crashing [Bloomberg]

Sum and Substance: At Uber Technologies Inc., chaos reigns. The ride-hailing company’s investors forced Chief Executive Officer Travis Kalanick to resign earlier this month, and much of its C-suite is now empty. Meanwhile, Uber is being sued by Alphabet Inc. (Google) in a high-stakes lawsuit over self-driving car technology, and the company is still suffering the fallout from explosive revelations of a sexist corporate culture.

On top of these problems, the company continues to lose billions of dollars a year, putting the viability of its core business model in doubt. So with all these problems, Uber’s sky-high valuation must have taken a big hit, right? If it were a public company, Uber’s stock price would almost certainly have fallen in response to the relentless parade of negative news. But here’s the catch: Uber is a private company, so no one knows how much markets really value it. The number most commonly quoted in recent months is $69 billion, rounded up to $70 billion. Its last major funding round was in June 2016, when it took $3.5 billion from Saudi Arabia’s Public Investment Fund at a valuation of $62.5 billion. But that was a year ago, before its troubles began.

With private funding rounds so rare, Uber’s valuation has to be inferred from the secondary market — i.e., people trading shares of Uber with each other over the counter. But because these markets aren’t public, the prices people are paying are hard to know, and must be inferred from rumor, anecdote and proprietary data gathered by various companies. TechCrunch reports scuttlebutt that places the value of Uber shares on this murky secondary market at $40 billion to $50 billion, which would imply a major, though not catastrophic, decline from the peak. But even this secondary market doesn’t really tell us how much the average investor values Uber. The reason is a lack of liquidity, a feature of all private markets. Unlike liquid public markets, where shares are traded on centralized exchanges and public prices are updated continuously and available for all to see, private shares require buyers and sellers to hunt around for each other. Some sources report that buyers for Uber stock are getting hard to find:

“The demand side has dried up relative to the sell side,” said Larry Albukerk, managing director of EB Exchange, a San Francisco broker that has arranged private sales of tech-company shares since 1999. “We’re getting calls all the time from people who want to sell” at least part of their Uber stake, said Albukerk. If Uber isn’t allowing its employees to sell their shares, as many allege, the potential imbalance between supply and demand could be even larger. The example of Uber demonstrates how the illiquidity of private markets makes them much worse than public markets for communicating information about a company…. This demonstrates why it’s very dangerous to replace public markets with private ones as the driver of capitalism. 

My Take:  The author of this article has identified a key point in the unfolding Uber drama, nobody actually knows what shares of Uber are actually worth, because there is no liquid market to establish their trading price. In an environment like this, there’s a very real potential for price manipulation. In other words, potential investor need to beware of scams.

Theoretically two investors who wanted to establish a higher trading value for shares could agree to exchange shares at an inflated price.  They could then leak out information about that price, and then other investors, perhaps in cahoots, could dump their shares at the higher price.

Private markets are not public markets. Private companies can share only as much financial information as they wish. This is a situation ripe for market manipulation. Given all the other stuff that’s happened to Uber, it wouldn’t surprise me if some investors were taking advantage of the relative secrecy of private markets to benefit from the dearth of available information.

California Says Uber Driver Is Employee, Not a Contractor [New York Post]

Sum and Substance: In a ruling that fuels a long-simmering debate over some of Silicon Valley’s fastest-growing technology companies and the work they are creating, the California Labor Commissioner’s Office said that a driver for the ride-hailing service Uber should be classified as an employee, not an independent contractor. The ruling ordered Uber to reimburse Barbara Ann Berwick $4,152.20 in expenses and other costs for the roughly eight weeks she worked as an Uber driver last year. While Uber has long positioned itself as merely an app that connects drivers and passengers — with no control over the hours its drivers work — the labor office cited many instances in which it said Uber acted more like an employer. Uber is appealing the decision.

The ruling does not apply beyond Ms. Berwick and could be altered if Uber’s appeal succeeds. Uber has also prevailed in at least five other states in keeping its definition of drivers as independent contractors. Yet the California ruling stands out because officials formally laid out their arguments for why Uber drivers are employees. That could bolster class-action lawsuits against the company in the state. California law expressly requires employers to reimburse employees for business expenses and several suits proceeding against Uber are based on that state law….
Yet labor activists and others have said such roles — with people working as freelancers and having little certainty over their wages and job status — are simply a way for companies like Uber to minimize costs, even as they maintain considerable control over drivers’ workplace behavior. They say that such control is typically the hallmark of an employee relationship, which should bring with it benefits, more stable pay and greater job security. …

“For anybody who has to pay the bills and has a family, having no labor protections and no job security is at best a mixed blessing,” said Robert Reich, former secretary of labor and a professor of public policy at the University of California, Berkeley. “At worst, it is a nightmare. Obviously some workers prefer to be independent contractors — but mostly they take these jobs because they cannot find better ones.”… 

“This is a very big deal,” she said. “Uber has been fighting very hard against any decisions like this coming out, and when a fact-finder sat down and looked at the situation, they determined that Uber is an employer.” Other Uber drivers may also be inspired to follow Ms. Berwick’s example, given that filing a claim with the California labor office is a relatively simple process. “We’ll see if this starts a trend,” said Wilma B. Liebman, the former chairwoman of the National Labor Relations Board. “I wouldn’t be surprised if there’s a flood of similar kinds of claims.”

My Take:  Similar rulings have been coming from courts and regulatory bodies in other countries. My gut is telling me that Uber/Lyft can only delay the misclassification issue for so long.  Sooner or later, the courts are going to come to a consensus that Uber/Lyft drivers are employees and deserve to be treated as such.

San Francisco investigating whether Uber, Lyft are public nuisances [Reuters]

Sum and Substance: San Francisco has issued subpoenas to Uber Technologies Inc and Lyft Inc for a broad scope of records on driving and business practices as part of an investigation to determine whether the ride-services companies have become a public nuisance. 

City Attorney Dennis Herrera said on Monday he was seeking records to investigate whether Uber and Lyft fail to adequately serve poor neighborhoods and the disabled and whether their drivers create hazards on the road. Herrera said the subpoenas sought four years of records from the companies, which are based in San Francisco and have an estimated 45,000 total drivers in the city. The sweeping request includes hours and miles logged by drivers, driver incentives, traffic infractions and city zip codes visited by drivers…. 

The subpoena sets up San Francisco and Uber for yet another legal battle, as the two are already locked in a fight over the city’s demands for drivers’ names and addresses. Herrera sued Uber last month to compel the company to comply with the data request, which Uber has said is an invasion of driver privacy. Investigating whether Uber and Lyft are a public nuisance in the city is an unusual approach for San Francisco. An influx of cars driving for the two companies often clog city streets and block bicycle lanes and double-park while they wait for passengers, according to the city…. 

Herrera added that the “long-distance” Uber and Lyft drivers who travel hours from the Central Valley and small communities elsewhere to find rides in San Francisco are a potential “threat” to public safety. They are on the road for such long shifts that they become drowsy, making the streets unsafe. Herrera also requested four years’ of documents and data submitted by Uber and Lyft to the California Public Utilities Commission, the state agency that regulates ride-services companies and collects much of the data the city is looking for.

My Take: This is taking place on my home turf, so I have some first-hand observations about the allegations that Uber and Lyft are creating a public nuisance. It amazes me how often, when I’m driving around town, I will see that glowing screen on a dash mount and Uber/Lyft app open.

Check out this piece on People Behaving Badly about the problems created by 40,000 ride hail vehicles roaming the streets of San Francisco. It amazes me how distracted most of these drivers are. I’ve had several rideshare drivers cut me off, without so much as an acknowledgement.

Knowing how demanding the job is, it doesn’t surprise me.  Combine the job distractions with a pedestrian population that’s increasingly focused on their smartphone screen and bicyclists who are trying to negotiate through the chaos, and you’ve got an ongoing recipe for disaster. I hope the information turned over to the City of San Francisco from Uber and Lyft includes data about how many accidents drivers are in, and how many of those accidents are the fault of the Uber/Lyft driver.

Readers, do you think other drivers are public nuisances? What do you think of the potential for Uber/Lyft drivers to be reclassified as employees? Why do you think veteran drivers don’t quit Uber/Lyft but new drivers do?

-John @ RSG