At this year’s Consumer Electronics Show (CES), Hyundai and Uber announced they are working on an all-electric air taxi. Now, CES is known for some fanciful (and impractical) inventions, but do you think it’s possible we will one day get a flying car? Senior RSG contributor John Ince covers this news and so much more below.
Uber’s CEO Made a Huge Mistake, and It Just May Signal the End of Uber [Inc]
Sum and Substance: By allowing founder and former CEO Travis Kalanick to walk away, Dara Khosrowshahi lost more than experience. He lost a key part of Uber’s heart and soul. …
Just one week ago, a decision went into effect at Uber that will have major consequences for years to come: Co-founder and former CEO Travis Kalanick resigned from Uber’s board of directors, essentially cutting ties with the company he helped build from scratch.
Of course, the writing for this was on the wall for a long time. Kalanick was essentially forced out of his position as CEO back in 2017, following a string of scandals and bad PR that convinced investors a change in leadership was needed. Kalanick was replaced with former Expedia chief executive Dara Khosrowshahi.
While mostly cordial when facing the public, Khosrowshahi and Kalanick butted heads behind closed doors. Then, when the company went public in May, Kalanick wasn’t allowed to join the bell-ringing ceremony on the New York Stock Exchange. This was a huge sign of disrespect to the man who had invested years of blood, sweat, and tears into building this company.
In the months that followed, Kalanick sold all of his stock in the company. By exiting the board, he’s now, in effect, “washed his hands” of anything to do with Uber.
Khosrowshahi was in a unique position to help stop this from happening–and he should have done all he could to keep Kalanick on board. Because by allowing Kalanick to walk away, Khosrowshahi lost more than experience. He lost a key part of Uber’s heart and soul. …
Kalanick also promised to start building a culture of accountability, one that put people first and better supported what he called “the heart and soul” of Uber–the drivers. “Putting people first means not viewing every interaction with a rider or driver as a transaction, but as a relationship–something we’re committed to investing in for years to come,” wrote Kalanick. …
Were these all just empty promises? Or was Kalanick truly dedicated to change?
The truth is, we’ll never know–because shortly after Kalanick penned this letter, he was forced to resign. …
My Take: This article has a point of view, and I don’t agree with it. It’s not that I think Uber is going to be just fine. I don’t. But I don’t think Travis’ departure is the reason. If Uber goes South, it will be because ridesharing just wasn’t a very good business to be in – in the first place.
Where’s Your Flying Car? Hyundai and Uber Say They’re Working on It [NY Times]
Sum and Substance: A model presented at the Consumer Electronics Show is said to hold the promise of aerial ride sharing at 180 miles an hour. …
Businesses and entrepreneurs have been promising a mass-produced flying car for more than a century. None have succeeded, but that hasn’t stopped Hyundai and Uber from wanting in on the action.
In Las Vegas on Monday, at the Consumer Electronics Show, the two companies announced that they were joining forces to develop an all-electric air taxi that would be part of a future “aerial ride-share network.”
My Take: Imagine that – Uber and Hyundai teaming up to build flying cars. Why am I skeptical? I think it has to do with Uber’s track record, and the fact that Hyundai is involved doesn’t make the deal. Okay, it is CES, but still I don’t see it.
Uber’s secret ‘Project Luigi’ involved more than letting drivers reject trips [CNET]
Sum and Substance: … Uber drivers in California finally got a feature last month that they’d been requesting for years — the ability to view passengers’ destinations before accepting trips. That means they also get to see how much they will earn from rides and have the ability to reject ones that don’t seem worthwhile. For drivers, the feature has widely been seen as a step in the right direction.
It turns out, however, Uber’s intent might not have been only to make things better for drivers. The new feature could also be used to make a case that California’s new gig worker law, AB 5, shouldn’t apply to the ride-hailing company. The feature was apparently the result of a secret project at the Uber titled “Project Luigi,” The Washington Post reported Monday. Internal emails seen by the newspaper allegedly state that Project Luigi was a “critical project around AB5” and it needed employees from across the company to work on it. Staff reportedly got dedicated office space for the project.
Under AB 5, all companies using independent contractors in California will be put to a three-part test to determine whether they must reclassify their workers. One of the elements the test looks at is how much control a company has over its workers, which includes items like whether workers wear uniforms, have a set schedule and make set wages. Because Uber hadn’t let drivers decide what rides they could take, that could be considered an element of control.
“We’re making a number of changes to the Uber marketplace, which tens of thousands of California drivers use to find flexible work,” an Uber spokesman said in an email when asked about Project Luigi. “While we are confident that drivers are already correctly classified, these product changes will further strengthen drivers’ independence and preserve their ability to work when, where and how they want.”…
It’s still unclear if Uber will be deemed by the state to have control over its drivers. Enforcement of AB 5 depends on various California labor agencies and city and state attorneys. If companies don’t comply with the law, they could be sued for violating it.
My Take: I’ll take the author’s word that this was part of a larger initiative within Uber to make it appear that the driver is an independent contractor. But I don’t think it makes the case very well. Being able to see destinations is fine as long as they’re no other factors involved – which would make the driver seem to be an employee. It’s murky. I don’t have an answer here, but it sure seems that Uber gave something… and didn’t get a lot in return.
3 Reasons Uber and Lyft Will Keep Sliding in 2020 [The Motley Fool]
Sum and Substance: The ridesharing stocks may be down, but they still aren’t cheap. Though Lyft (NASDAQ:LYFT) and Uber (NYSE:UBER) both made big splashes on the public market with their IPOs last spring, the two ride-hailing stocks are down significantly from their debuts, falling 40% and 34% respectively, as the chart below shows.
Considering last year’s troubles, investors may be hopeful for a comeback, but there are a number of reasons to be skeptical of a recovery in the industry. Let’s take a look…
1. The regulatory environment isn’t getting any better
Red tape continues to abound in the industry as operators like Lyft and Uber have often run afoul of local regulations and upset both bureaucrats and their own drivers. In California, AB5 just became law, making it difficult for companies like Uber and Lyft to classify its drivers as independent contractors rather than employees. …
2. The financials are still ugly
Uber and Lyft received cheers from investors when both companies said they would be profitable on an Adjusted EBITDA by the end of 2021. While those statements helped reassure investors that the companies see an end to the pools of red ink they’ve accumulated thus far, Uber and Lyft now need to execute on those goals while maintaining a high growth rate. …
3. Investor sentiment is changing
… Like WeWork, Uber also raised billions of dollars from Softbank and typifies this kind of company, whose Amazon-like ambitions have helped it raise capital but don’t match the reality on the ground. …
My Take: Here we have the financial perspective, and it doesn’t look good for Uber. These are 3 simple factors, and if they’re what investors are using then I don’t think Uber’s is a buy right now.
Uber makes major changes to California rides as gig-work law takes effect [SF Chronicle]
Sum and Substance: Uber rides are changing in California for both drivers and passengers as the ride-hailing company works to strengthen its defenses against AB5, the new gig-work law that makes it harder for companies to claim that workers are independent contractors rather than employees.
On Wednesday morning, Uber emailed 150,000 California drivers and millions of California passengers to alert them to the overhauls. The company is giving drivers more control over their rides and making fares more transparent — which could mean passengers find that some types of trips get rejected more frequently. …
Uber, which loses money at a rapid clip, is intent on keeping drivers from becoming employees, which could add some $500 million a year to its labor costs, according to an estimate from Barclays. …
Here are the new policies for Uber rides:
Pricing: Passengers will now see an estimated price range, rather than a firm fixed price when they request a trip. Prices will still be calculated based on the existing time and distance rates. …
Upfront trip info: Drivers will now see a trip’s time, distance, destination and estimated fare ahead of time, and can reject ride requests without penalties. (They can still be penalized for accepting rides and then canceling them.) …
Surge: Pricing for surge, meaning times of high demand, will be calculated as a multiple of the trip fare rather than a dollar amount, something Campbell said drivers would prefer (it generally means driver can make more money).
My Take: These are big changes. They will affect the way drivers do their job, but are they enough to tip the balance in the AB5 test? I don’t think so. Time will tell.
Chase adds free DashPass food delivery for select cardholders [The Points Guy]
Sum and Substance: Chase just launched a very interesting new promotion in partnership with DoorDash, offering discounts on the company’s DashPass unlimited delivery program.
For $9.99 per month, DashPass customers receive lower service fees and free delivery on all orders of more than $12. According to the company, members save an average of between $4 and $5 per order. The fee is normally waived for all customers for the first month, but now select Chase cardholders will get a significant discount for a minimum of one year. Some Chase cardholders get it for free.
Editor’s Note: If you use DoorDash even occasionally and have a Chase credit card, you should see if you qualify and can activate this offer. To activate, simply add your eligible card to your DoorDash app and click ‘add offer.’
— Harry Campbell (@TheRideshareGuy) January 7, 2020
Readers, what do you think of this week’s round up?
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-John @ RSG