Uber is a company in disarray.
It seems like there’s a new scandal every day and yesterday, Uber CEO Travis Kalanick announced that he would be taking a leave of absence with no set return date. Most of the executive positions at Uber are now vacant, and for all the positive change Uber has brought to the transportation industry over the years, they may end up being remembered for all the wrong reasons.
A lot of this turmoil has stemmed from Uber’s growth at all costs mentality. Uber wouldn’t have made it this far if they followed all the rules, but at a certain point, when a start-up graduates to a legitimate company, you have to adjust your priorities.
For Uber, that inflection point has come and gone. Now the company appears to be in chaos, and the board is taking steps to rectify the situation. But what affect is all of this internal disfunction having on drivers?
Not News to Drivers
Over the past few years, we’ve covered many of the issues facing drivers. But this time around, it’s different. Uber has gone too far. Their growth at all costs mentality is now affecting employees and investors.
However, if you talk to drivers about the issues going on at Uber, many aren’t surprised by all of these revelations. It may have been shocking for outsiders to see the CEO of a $70 billion company on video arguing with a long-time driver, but that video reinforced my image of who Travis Kalanick is. He’s never done anything that would suggests he cares about drivers.
Remember, Uber was founded by guys who wanted a better way to hail a ride, not guys who were trying to revolutionize the taxi driver experience. That shows in the policies, programs and culture propagated from the top down over the years.
I still remember meeting one of Uber’s employees a few years ago and talking about driver churn after Uber’s first big price cut. He explained to me that every time Uber cut prices, they would lose X number of drivers and it would cost Y to replace them. But as long as their ride volume increased enough to make up for the difference, it was a net positive (for Uber).
The first thing that came to my mind when hearing that explanation though was, what about all those drivers who are quitting? New drivers invest a lot of time, energy and effort in this job and when they quit, they’re essentially giving up and everything they’ve invested is now useless. Drivers may just be numbers on a spreadsheet to Uber, but there’s a lot more that goes into this job when you’re on the driver side of the equation.
I’ve seen this mentality manifest itself over and over when it comes to Uber’s relationship with its drivers, so while the turmoil at Uber may have surprised some, I wasn’t shocked to find out that Uber’s culture doesn’t treat employees that well either.
Passengers and Drivers Have a Lot in Common
I’d love to say that all of Uber’s bad press has caused a mass exodus of riders from Uber to Lyft, but that just hasn’t been the case. Lyft drivers have reported a slight uptick in riders saying they deleted Uber or ‘only take Lyft now’, but that’s still a self-selecting group. Plus, we’ve heard this type of rhetoric from Lyft passengers even before all the Uber scandals.
Uber drivers are not switching to Lyft either since, for the most part, Uber’s product hasn’t been affected by any of this turmoil. As an Uber passenger, you can still hail a ride in almost any major city in the United States, and you’ll get a reliable, safe and cheap fare – especially compared to the alternatives. Sure, Uber’s ‘issues’ come up more often in conversation these days with riders asking me questions like, ‘so what do you think about Uber’s CEO?’. But most passengers care more about getting a ride than the company culture, and it shows in the numbers.
Uber has continued to post record growth figures, and it’s clear from the thousands of e-mails that we get from drivers that as long as the rides are flowing, drivers are going to keep working for Uber. And as long as Uber offers a great product, riders are still going to request rides.
So Where is Uber Vulnerable?
No matter what Uber does, their app is always going to let passengers hail a ride from a smart phone, track their driver, pay with a credit card and rate their driver. These are inherent features built into the product that aren’t going to disappear. So in the short term, all of these scandals may complicate operations but they’re not going to have a big impact on the day-to-day business of giving rides.
Uber no longer has a COO, CBO, CFO, CMO or SVP of Eng and may temporarily not have a CEO.
From autonomous cars…to autonomous company
— Hemal Shah (@hemal) June 12, 2017
The real risk is with longer term efforts like employee retention and recruiting. Uber is losing executives left and right, but if everyone else starts leaving, future iterations of Uber’s product may not be so great. In a weird way, this could end up benefitting drivers down the road, since it would open the door for competitors. Uber’s always had the best fundraising, the best talent, the best executives and it’s helped them retain majority market share. Uber’s always been one of the top jobs in the Bay Area but now, other tech companies have the opportunity to start poaching talent.
Lyft is Looking Long Term
Lyft has always cultivated a more driver friendly culture than Uber and their drivers report much higher levels of satisfaction and hourly earnings because of it. Yet just like riders, drivers tend to go with the platform that’s more reliable, and that’s usually Uber. With Uber, drivers on average get more rides, wait less and make more money. And since the consumer product is so good on Uber, there’s not a lot Lyft can do to get passengers, and thus drivers, to switch.
So the best way for Lyft to take advantage of the current situation with Uber is to think long term, and it appears that’s what they’re doing. In recent months, Lyft has secured partnerships with Jaguar Land Rover, Waymo, Nutonomy and more.
In the past, Uber was the company that everyone wanted to partner with, but now Lyft is locking in partnerships, funding and more. The benefits won’t be seen for years to come, but this will have a huge impact in a world with self-driving cars where partnerships will be key.
What Does Kalanick’s Leave Mean for Drivers?
I think all of the culture changes that Uber’s board has agreed to implement will be a good thing for the company, but I’m still not sure how drivers fit into the equation. There’s a lot that can be done to improve the driver experience, but who will champion these efforts?
Jeff Jones was appointed ‘president of ridesharing’ and became the number two executive at the company yet he accomplished very little for drivers before his departure. So either he spent close to a year talking to drivers and didn’t understand a single major pain point or someone at the top didn’t care what he had to say.
I tend to believe the latter and, although I’ve never met Kalanick in person, I’ve never gotten the impression that he cares much about Uber drivers. We’ve seen it with his comments over the years and we’ve seen it with the policies he’s championed.
Drivers have never been a priority for Uber and Kalanick because it would cut into the company’s growth. Pay drivers more? No way, then we’d do fewer rides. Hire better customer service reps? Too costly. Add a tipping option? No way, then riders will have to look at a tip screen when they exit the car!
With Kalanick taking a leave of absence, there’s an opportunity for someone to step up and mend this relationship. But in order to do so, Uber’s going to have to sacrifice growth and that may piss off investors and mean more expensive rides for passengers. Lyft has done some of that and built a $7 billion business. Their market share is only a fraction of Uber’s, but their company cares about drivers from the top all the way down to the bottom.
Uber has always had hundreds of employees who care deeply about the driver experience, but it hasn’t meant much because of who was in charge. And that’s why improvements to the driver experience have always taken months or years instead of weeks or days.
Uber has often been rewarded for going against the grain but now, that strategy has backfired and their reputation is a mess. And while the numbers may still look good on paper, spreadsheets don’t always tell the whole story. I hope that this is a turning point for Uber and their relationship with drivers improves, but for now, I have to go with my gut and say that it might be too late.
I hope Uber proves me wrong.
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-Harry @ RSG