(The Big Disrupt) Uber: As Uber exits its worst month ever, it's Achilles heel ruptures again.

Self immolation used to be an entirely selfless act of protest that throughout history have captured the mood of a nation and inspired revolution but now it self immolation refer to tone deaf tech companies how still fail to release that customers aren't the only relationship  they have to worry about. 

We've said before that Uber is playing with fire and after a February from hell which saw the company lose 200,000 users, get sued by Google, and embroiled in a internal sexual harassment and discrimination investigation. We've also said that there's only three or four key relationships that make or break a company namely the relationship it has with its customers, shareholders, employees and regulators (depending on industry) and Uber currently is torching three out of out of the four with inexplicably bad decision making that is starting to catch up with them. 

Uber is fascinating because we've never seen a company brazenly burn so many bridges in such a short space of time and still live to tell the story. Uber, until last month at least, had at least been able manage its relationships with customers and investors effectively but Uber's relationship with its drivers has been almost adversarial for years. As we walk slowly but surely into a future where AI and robots take over the workplace, companies go out their way assuage fears about the inevitable but Uber, maybe with the exception of Amazon, has been open with its ambition to replace human driver with driverless cars which even Uber founder and CEO Travis Kalanick admitted driverless cars will allow them to provide their service cheaper. 

While most drivers realise the rise of driverless cars seems almost inevitable, working for a company looking for ways to eventually replace you doesn't exactly improve morale among drivers Uber relies upon.  However,  driverless cars may be the 20th issue that drivers care about when dealing with a company that's not afraid to cut fares, forbid tips and externalise costs such as insurance that hurt drivers and with a straight face act like they have their drivers best interests at heart.      

Uber's relationship with its drivers wouldn't be so bad if they made more of an effort to hear their concerns and actually try address them but so far the San Francisco based company has been found wanting in communicating with its drivers. Many drivers complain about how difficult it is to get in touch with the company or talk to someone who matters about their concerns. To its credit, Uber did hold a Q&A where drivers could pitch questions via Facebook to the president of ridesharing Jeff Jones last month but in true Uber fashion, the Q&A lasted 30 minutes leaving many drivers incensed and with the idea that Uber, really couldn't care less about them and concerns about the platform.   

    

Why Uber is so standoffish with its own drivers is baffling considering Uber are highly dependent on drivers who don't work for them, are taking them to court in key markets and complain loudly when fares are cut. While dominate the ridesharing market, they still have competition in ford backed rival Lyft who recently expanded into 50 cities while Uber was self immolating and are more than willing to take disgruntled drivers off their hands. Lyft has a much better relationship with its drivers but that's because Uber suck the air out of room as it cut fares and has just as strong an interest in building a driverless fleet as Uber do. 

It could be argued that Uber's terrible February is owed to its greater public profile and its mistakes are amplified almost all the mistakes it makes are avoidable particularly when it comes to communicating with drivers who could bring uber to it's knees. Uber ended the worst February in its young history with Kalanick being caught on cameras being arguing with one of its  drivers during Super Bowl weekend over fare cuts which served as a telling microcosm that points to  why the relationship between Uber and its drivers is so bad.  For one, if  Uber was better at communicating with its drivers and addressing issues that affect them, it's highly likely the confrontation wouldn't have happened. The driver's  frustration and anger were on display  as he told Kalanick about fare cuts that affected him and his livelihood.

What was telling about the whole incident wasn't the driver throwing shade at Kalanick about fare cuts but his reaction to the drivers concerns that Uber was phasing our drivers by cutting fares and raising standards at the same time. Instead of hearing the driver out, Kalanick more or less admitted that his concerns not unfounded and justified the fare cuts as a response to its competitors despite knowing both him and driver are aware that that his company all but own the rideshare marketplace and has more cash than their rivals.  

The driver also points out that since Uber dominates the its market, it can raise prices which would benefit drivers but Kalanic evaded the driver's challenge to raise prices and admitted that they owe their dominant position in the marketplace to subsidizing the cost of using Uber, which hurts drivers as much as its rivals.   

      

Things went downhill fast when the driver claimed that fellow drivers don't trust Uber enough to spend money on cars and associated costs because of the Uber's tendency to cut prices and   claimed that he lost $97,000 and went bankrupt because of it. It was right here where Kalanick could have turned this potentially embarrassing conservation into a sign that Uber was interested in to improving its relationship with drivers and that he personally cared about drivers but instead Kalanick went on the offensive and blamed the driver for not taking responsibility for his own problems. 

This video should be shown in business schools and to future CEOs everywhere in how not to respond to disgruntled members of its workforce as at best Kalanick comes off as insensitive, at worst, he looks like an absolute douchebag. In response to the video Kalanick admitted that he needed "leadership help" and needed to "grow up" probably realising that he could easily avoided another PR nightmare with using a clear opening to descalate the situation. 

In sum, Uber have officially seen the back of its worst month ever but should Uber continue to fail to address the bad relationship it has with its drivers and increasingly with its employees, Uber's horrible February could be a sign of things to come.  

(The Big Disrupt) Uber: Uber’s Californian nightmare

With Uber closing down operations in France and two of its executives being held under arrest, it’s surely time for the Google backed car hailing company to review its ill-advised strategy of getting under the skin of governments and taxi drivers across the planet.

Uber has been harassed, harangued and protested by governments and taxi drivers against in just about every country it’s operates in as the company has launched operations in countries with the truly naïve notion that the disruptive and regulatory implications of their service wouldn’t garnered them the attention of both governments and taxi drivers despite the vitriol and legal drama the company has faced wherever it went.  

Governments and taxi drivers have been all over Uber like a hot rash for a number of reasons but the main contention has been over Uber’s reluctance to be pinned down as a taxi service and therefore avoid dealing with the burdensome regulations that come with it. Uber have consistently described themselves as an app service which largely doesn’t wash with either governments or taxi drivers who have to compete with a popular and cheaper service that’s not beholden to the regulations they are.

Taxi drivers everywhere have cried foul over Uber’s ability to flout regulations and have taken to the streets as the California based company represents an extinction level event to their industry. While characterizing Uber as an extinction level event for the taxi industry might sound hyperbolic, tell that to French taxi drivers whose protests against Uber turned violent as, according to The Hamilton Spectator, “100 Uber drivers ha(d) been attacked, sometimes while carrying customers”[1].

Taxi drivers and fleet around the globe would probably take Uber’s disruption on chin if Uber played but rules of the road but Uber, intent on arguing its status as merely an app service that simply connects consumers with drivers, have other ideas. The reason Uber make this argument beyond actually seeing themselves as an app service is that Uber don’t want to insure their drivers as doing so will make insurance costs one of the company’s largest expenditures and fast. It’s why Uber has had to brave legal battles, bans, and protests in every country it operates in and the bad press that comes with it as Uber simply doesn’t want to take on a very large liability.

So far, it’s been Uber’s drivers taking on the insurance liability forcing drivers to lie to their car insurance providers who’ll likely raise their rates or potentially drop them altogether. However, Uber will no longer be able to have their cake and eat it in California at least as thanks to recent changes in the law, Uber now have to cover their drivers from the moment they use Uber’s app to the moment drivers turn it off.

Insurance company executives must be jumping for joy in their boardrooms upon hearing the news of the California law change as it part of a growing trend of states in the US changing their laws to make sure that Uber insures their drivers. Uber executives however are likely to have their heads in their hands wondering why California of late has been tough on them as the Californian labor commission ruled that Uber drivers were employees as opposed to contractors.

It’s one thing that states are pushing to make Uber insure its drivers but recognizing their drivers as employees is literally Uber’s worst nightmare as insurance is merely a drop in the pool compared to the costs the company will incur if its drivers are ruled as employees as rulings like this “opens Uber up to higher costs, including Social Security, workers’ compensation and unemployment insurance”[2]. Should more states in the US and countries across the globe make similar rulings, Uber’s business model will be seriously hobbled by onerous obligations and raise driverless cars a rungs up Uber’s corporate agenda from a far flung ambition to the organizations top business priority.

In sum, Uber, despite the bad press, protests, and legal battle have largely had their own way but with the double whammy served up by their home state in making them cover their drivers and, more importantly, recognizing them as employees, Uber could find themselves in real trouble should other states and countries follow the Californian example.

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[1] The Hamilton Spectator, 2015, French taxis strike after weeks of rising tension over Uber, http://www.thespec.com/news-story/5695185-french-taxis-strike-after-weeks-of-rising-tension-over-uber/

[2] C. Johnson, 2015, Uber drivers are employees not contractors, California rules, http://www.theguardian.com/technology/2015/jun/17/uber-drivers-are-employees-not-contractors-in-california-ruling