WASHINGTON, November 9, 2015 – Everybody loves Uber. Everybody, that is, except for the Uber drivers who see a great idea slowly eroding into a profit grab for Uber’s corporate parent − a corporate parent who at the end of the day has the least amount of skin in the business. That honor goes to the independent drivers who carry all the costs but have no input into how their services are charged or the profit structure for their business.
Slightly less than a decade ago, Uber − the now-global independent ride sharing business created in San Francisco − built a better taxi cab service and,indeed, the world did “beat a path to its door.”
Unfortunately, Uber failed to pay attention to Isaac Newton’s Third Law of Motion, which says,
“For every action, there is an equal and opposite reaction.”
And therein lies the flaw in Uber’s business model. Whether this will prove to be Uber’s undoing remains to be seen. But there is certainly room for improvement with the Uber concept.
The biggest thing Uber has going for it is rider support. Compared to taxicabs, Uber service is faster, more efficient, cleaner and cheaper than its traditional transportation competition. Riders love it. All things being equal − forget the lower fares − Uber’s efficiency and ability of its customers to speak English to local Uber drivers are well worth the price.
What Uber is not however, is “driver friendly.” Rarely, if ever, does Uberdo anything to benefit the source of its revenue: its own independent drivers. To the contrary, Uber considers its largely anonymous fleet of autonymous drivers to be an unlimited and expendable commodity.
The result? Uber is constantly biting the collective hand that feeds its coffers with billions of dollars each fiscal year.
Just as it did last year, Uber has reduced its already low fares as the holiday season approaches. The corporate spin is that lower prices translate to higher customer demand and therefore more rides and more income for drivers.
While that may sound like a Republican trying to explain his reasons for supporting lower taxes, the paradigm does not compute for ride sharing. Regardless of how high demand may be for any given period, a driver’s ultimate income is limited by the number of rides he can accept in an hour. From the moment a driver takes a call, drives to the pick-up location, drops off his fare and goes back online to find another, the entire process requires a minimum of 15 minutes from start to finish.
Which means that Uber drivers cannot reasonably provide more than four rides in any given hour, no matter how high the demand for their service may be.
Furthermore, in order to do book rides in 60 minutes a driver must focus on short-haul trips that amount to approximately $4 in revenue per trip.
So while Uber itself may see more demand as a result of its holiday pricing, drivers personally receive no benefit from the increased volume that results. Corporate Uber does benefit, however, as more people opt to take advantage of the lower fares versus self-driving or hiring traditional taxi cabs.
But that’s just one small sample of the nickle and dime approach Uber takes with its drivers. Everything the business does is geared first to benefit Uber. Its customers are next in the queue, but never the drivers. As one Uber driver put it, “It should be a win-win-win situation. Instead it is win-win and a marginally profitable operation.”
Drivers say driving for Uber is like working for Big Brother and the Wizard of Oz at the same time. Uber refers to its drivers “partners,” but “partners” have no way to contact the business other than by email.
But the business plan is designed that way because Uber drivers are actually independent contractors. Having a link to someone in the organization would indicate there is a corporate structure, which Uber absolutely does not desire for a multiplicity of reasons.
Hence, if a driver has a problem, he or she must email Uber. Eventually the driver will receive a response, which more often than not is a standard “form” reply telling the driver something similar to “thank you for contacting us,” followed by “we are working on the problem.”
Uber is the ideal metaphor for doing business in a 21st century world. Profits over people.
As for that nickle and dime philosophy with regard to the company’s drivers, here are some good examples:
- Cell phones for accepting calls were initially provided to Uber drivers. Today there is a $200 deposit and a $10 a week charge for using Uber’s system. (In fairness, drivers can use their personal phones, if they choose);
- Today, Uber charges a fee for every ride. The original charge was deducted from a driver’s fare. Therefore, the more trips a driver completed, the more money he paid to Uber. Since then, Uber has increased its rider fee, claiming the additional money is necessary background checks, insurance, etc.
- An Uber driver who accepts 200 trips a month can easily put 50,000 miles on his car or more in a year. However, don’t let a driver contact Uber via email to explain that he, too, has expenses, such as gas, maintenance, oil, tires, insurance and the like.
- Uber is a company born of the Internet age. Its business model was created employing statistics and algorithms that are wonderful in the theoretical world but do not compute in the real world where drivers are the least of Uber’s concerns.
Today, Uber’s business slogan should be “Uber begins with ‘U’ but NOT with ‘YOU.’”