We need to talk about Uber…

By Nick Burt | Marketing Executive | Magenta Technology

Like Facebook, Amazon and so many other companies before it, when Uber was founded in March 2009, it set about to become a revolutionary and disruptive force within its own industry. It was founded on the simplest idea, borne out of a genuine need, and sought to rectify what it saw as a serious gap in the private hire market. “On a snowy Paris evening in 2008, Travis Kalanick and Garrett Camp had trouble hailing a cab. So they came up with a simple idea – tap a button, get a ride.””[1]

Fast forward to mid-2017, and you have a company with an estimated 50 billion dollar valuation, active in more than 674 cities across 83 countries. Sounds like the fairytale success story, right? Well things may not be exactly what they seem. There is a dark underbelly to this seemingly genial transport company. I could draw attention to the scandals Uber has suffered over the last few years, such as the “Greyball”[2] strategy, where Uber abused personal information to create fictitious pick up points to avoid being ticketed. Alternatively, I could discuss the recent revelation from former employee Susan Fowler about the ‘hostile work environment’, which may or may not have contributed to chief Kalanick taking indefinite leave. My issue however, is not focused on such revelations, nor is it based on the countless private hire companies that have struggled, suffered or even closed due to Uber’s rapid rise. My issue is the cost to the consumer.

Today, if you’re heading off on a night out in London or, more likely, if you’re heading home after a night out, the odds are you’ll order an Uber. Just as the term ‘Facebook me’ permeated its way into the vocabulary of every millennial during the middle of the noughties, large demographics of the private hire users, especially the young, have replaced saying ‘order a cab’ with ‘order an Uber’.

Now, on the face of it, this isn’t necessarily a bad thing. New company comes to the fore, disrupts the establishment though its ease of use and apparent value to customers, and starts providing a better service. Except this is no longer the case when it comes to Uber. They have a chronically cynical business model, focused not on care for the drivers or passengers, just the shareholders. They move into an area, run a deficit to rapidly undercut the establishment with cheaper fares and paid driver incentives, wait until they have sufficient control of the market, then surge charges. Their policy to crush opposition by subsidising fares to a low enough level that no one else can compete is not only a very expensive way to buy market share, and if not illegal, is ultimately bad for the industry as a whole. You only have to look at the fact Uber lost 2.3 billion pounds last year as evidence this type of practice is neither beneficial for the private hire industry, not sustainable for Uber themselves.[3]

Now, I can only speak for certain from my own experiences, and won’t try to generalise my views as representative of the masses. However, having spoken to friends and colleagues, I know that they at least somewhat share my opinion on the now legally deemed ‘transport company’. Once a blossoming and energetic start-up, it’s ambitious rise has caused it to morph – like so many others – into a corporation that prioritises profit over value. This isn’t just value at the expense of customer, but also the drivers hired by the company.

To explain why I’ve come to view Uber in this manner, I’m going to share two personal driving experiences I’ve had with them over the last year. The first was while working for a company in the centre of London. Having compiled all the equipment for an event I was attending, I ordered an Uber to take me on my journey. Knowing I could walk the route in 20 minutes, and with Tower Bridge being closed at the time meaning the road we should’ve taken was more or less empty, I felt 40 minutes was sufficient time to get there. Being perfectly honest, 10 minutes would have been enough. Once the journey commenced, however, it became clear that this was not going to be the case. Having circled two separate estates, my driver proceeded to ignore my suggestions, and instead chose to take the A11 towards Bank, in an even more congested rush hour due to the Tower Bridge closure I mentioned before. Fast forward an hour, and I was dropped off late, and a good hundred metres from the venue entrance as the driver continued to make wrong turns on this calamitous journey.

Now, in the driver’s defense he’d been following his satnav the entire way. But whatever the reason, whether it was down to his satnav, his own choice of routes or a fundamental misunderstanding of London roads, I – the consumer – was left worse off from the encounter. Although this is the only one of two examples I’m sharing, I can assure you that one more than two occasions either wrong turnings or inexplicable satnav directions have unnecessarily extended my journey, costing me time and money. As you can see from the map below, the arrows and blue line indicate the route taken by the driver, while the route in red is the one I suggested. Since 2010 and the introduction of Uber into the London market, private hire cars have doubled to 120,000[4], but this market saturation has not increased value in anyway for the consumer. It has detracted value by replacing the ‘knowledge’ required by London taxi drivers with a satnav system that allows for strange, augmented journeys, and has removed the accountability normally held by the drivers.

The second experience I had came on my return to Heathrow Airport after a business trip. I ordered three Ubers in succession and was phoned by each driver to ask my destination. Shortly after telling them, my ride was inexplicably cancelled. After the third attempt, a fellow Uber hailer informed me that, because Uber drivers can’t see destinations until pickup, they were ringing ahead to check the estimated fare they could receive, and in my case, how far away I would take them from the money maker that was the airport.

While I was initially angry at the drivers for their poor customer service, I began to wonder if there were other factors at play here. It turns out drivers’ fares are a constant source of contention within Uber, and Quartz magazine has stated that some drivers have even been asking riders what the fare estimation is, then checking it against their fare amount to search for pay discrepancies[5].  While I can sympathise with the Uber drivers on unfair pay gaps, once again, I – as the consumer – was left to suffer the consequences.

Again, while I can’t generalise this view as that of all Uber users, initiatives such as the #DeleteUberCampaign on Twitter show that I’m not alone in being disgruntled with the transport company. “Thousands of protesters across social media urged others to switch to Lyft in the US as a show of dissent towards Uber’s profiteering policies.[6]” The problem for so many is that Uber is engrained in the psyche as the only viable option for private transportation. Being the first in this new way of disruptive private hire, it’s hard for people to overcome the original view of Uber. Even in the face of scandal, extended journeys, surcharge fares and growing discontent over company management, people still seem to rely on the company more out of tacit acceptance, rather than on the value it delivers.

Taking London as my example again, it is clear that rapidly increasing the number of available cab drivers has not increased the quality of service to the customer, simply the quantity of service available. By conducting such a cynical business strategy, incentivising an endless supply of drivers with cash payments[7] and using shareholder’s investments to help undercut the competition, they will continue to grow and dominate the industry. Their current business model is simply unsustainable as it is, and the consumer will continue to suffer while Uber searches for the best way to maximise its ROI.

Disclaimer: The opinions represented here are the personal opinions of the individual writing them, and do not necessarily reflect the views and opinions of Magenta Technology.

Nick Burt | Magenta Technology | nick.burt@magenta-technology.com