Uber shares the pain, takes the gain

Covid-19 is further exposing Uber's caricature of a people-first business model

Uber, Lyft and other ‘sharing economy’ brands slashed staff and operating expenses this week but not because of Covid-19. That’s just the impetus exposing the faults of a poor business foundation in the harsh light of day.

What’s actually led to this point for Uber is a lawyer-ball game plan from the start, several questionable business practices, and a litany of well-documented unethical corporate behaviors -- None of which lines-up with the concept of sharing as I understand it.

Of course, we all know it’s not really sharing -- it’s renting, your stuff or yourself. In Uber’s case, it’s your car and you driving it that you are renting. In AirBnb’s case, you rent out your extra room or unused cottage. 

These markets have existed as long as cars and spare couches to crash on. It’s just the digital medium that the Ubers of the world have brought to the equation that’s different.

The Uber model is to get in the middle of those transactions, at global scale, yesterday, and maximize profit. They monetize on the ride itself, at the payment gateway, and through the reams of experiential and location data the company collects from users.

That there were and are hundreds, or even thousands of laws, lawsuits and settlements between Uber and their global business objectives is insignificant in the minds of their key investors.

Uber’s financing includes a lot of money allocated for lawyers to fight those legal battles, and massive investments in brand marketing and public relations, more than Uber puts into driver training and support. Why?

Because Uber’s investors know damn well fighting towns, states and countries that don't want Uber in their community is expensive and lengthy work. That’s fine though; the longer the legal battle stretches on, the more revenue Uber can squeeze out of each local economy before leaving town for good.

Uber’s human resources team knows that the company will churn through drivers everywhere the company goes, and so do everything they can to minimize investment in operators, instead focusing on developing policies to muzzle the drivers who take public their many, many concerns with Uber.

Uber’s board knows that people will be sexually and physically abused while using their service. But their lawyers and mouthpieces are well-compensated to tap dance around matters of liability and indemnification in courts both legal and public, and the board members themselves can't be held accountable.

Uber’s insurers know that people will be injured in accidents while using Uber's service. Some will be users, or drivers, or just innocent civilians. Some will die, or require lifelong medical support. In some cases, liability will be greater than others. But that's just business. Life and death are an equation.

At Uber risk-management HQ, fingers fly on an actuarial table . . .'So many deaths per year in market X, plus N rape and accident lawsuits at such and such dollars per settlement, deducted from total ride revenue and data as a service income . . . The numbers work! Let’s start sharing people!'

Uber investors and board members and executives make these decisions deliberately. They do so because confrontation and obfuscation are Uber's standard operating procedures.

I feel for the staff and contractors of Lyft and Uber impacted by these cuts like I feel for the whole world right now. I hope we all make it through to the other side and come out better for it.

But Uber and other sharing economy brands that position themselves as digital Robin Hoods taking on Boomer-think business models are weak caricatures of sustainable, people-focused companies. That misrepresentation is intentional and baked-in to the very character of the brand.

I detest that business approach and it pleases me to watch it fail. Sorry, not sorry.

A handful of early investors and some overpriced professional Yes Men will eventually profit from Uber. The rest of the market will be left on the side of the road by a brand that clearly looks to share the pain, while taking the gain.

Scott Valentine, Editor

Scott is a prolific editor specializing in B2B tech. His work has appeared with Forbes, the WSJ, Thomson Reuters, the Guardian, VentureBeat, the CBC and many more. Scott's clients include top retailers, analytics companies and investors. As a marketing and communications executive, Scott has been part of $1.5 billion in exits, and counting.