It’s not that often that appear in the world companies like Uber that in the process of creating a business, they touch at the same time different socio-economical forces.
By touching at the same time these multiple forces, it makes any argument quite complex, because often people start referring at Uber – the company – and then they shift discussing social issues. Or they start talking about social issues, and they end up commenting on the long term structure of law making and government intervention. While every successful business have to an extent similar effects on society, it’s uncommon that this effect presents itself so clearly and so acutely in different aspects.
We can call this the Uber Phenomenon to separate it from Uber, the company. Also because “uber” means “more”, “superior”, and this is a more evident expression of the interplay of these elements.
There are three lenses that I feel are useful to analyze the situation:
- The business lens
- The law disruption lens
- The ethical lens
The Business Lens
Uber as a business is a great idea very well executed. Note how I pair the two ups: I find the common discussion of superiority of idea and execution pointless. You need both. They have both.
Uber isn’t just executing well: it’s also a very aggressive case of it. They don’t just execute, they do that very boldly. Excellent examples of this is how they approach regulation, how they incentivize private drivers to buy better cars, they do a lot of stunts to get the media attention (kitten deliveries!), they are in the right markets to use that hype (USA), and so on.
That said, notice how there are however other companies that have both the same idea and a good execution, even if they aren’t maybe as agressive: Lyft. Hailo. Sidecar. Gett. Etc. I’m sure that with enough research you’ll be able to find many others.
Under the business lens Uber isn’t that special: it’s one of many well funded businesses that is following the sharing economy trend (while not being sharing economy) and it’s doing it well. But undoubtefully they are executing well.
The Law Disruption Lens
This is one of the reasons why Uber is often attacked, but for me this is a no-issue. No issue not in the sense it’s not causing problems, but because that the disruptive, challenging approach is one of the ways that make institutions change their laws.
I hope that nobody would argue that the cab licencing systems in most countries is in a good shape. The words you find more often by analyzing them are: closed market, no competition, untouchable, and so on.
So how do laws get changed? You can go for the slow road to change them from the inside, but while this sometimes work, most of the time for certain laws requires a forced change in status quo. Sometimes it’s a popular revolt, sometimes is a big shift in the leaders, sometimes… companies challenge them.
This doesn’t always work well, for sure. It depends a lot on the company and their intent. It depends on how much the public cares or agrees. For example there are people that agree about oil companies lobbying for more freedom of action, because they feel oil is critical to the working of this society and they don’t feel the dangers are tangible. You can disagree with this as much as I do, but it’s a perspective, and in absolute terms from them being right to being wrong it’s just a matter of how many people believe in it.
So: disruptive business have the ability and are beneficial to the society in trying to change laws: the clash generated between the company, the institution and the public usually brings us a better law.
To be clear: it’s not that these laws were formed just to create damage. These law were created to improve the situation from a previously worse one. They created a market. Government regulation here worked well, it’s just too slow: today, they can be improved.
It has been argued that being disruptive or not is part of the business model. It’s not. It’s part of a strategy for sure, but the model is the same: I need to go somewhere, I use my smartphone, get a transportation vehicle, get somewhere, pay automatically. Inside that experience there’s the business model.
The Ethical Lens
If the disruption lens is a controversial one, the ethical one is even more, because “ethical”:
- Is a non-issue for many business managers and financial advisor, under the motto that “if it makes money that’s ok”.
- Has a not very precise definition, and can escalate quickly to philosophical debates, and can get thus accused of being unsubstantial.
Nonetheless, the Uber Phenomenon includes an ethical standpoint, because the actions aren’t just aggressive they also too often take an unethical take. This means that the two aspects need to be separated.
The difference is between a company that help car driver to upgrade their car with good deals to get more drivers on the streets, vs a company that promise people a certain income level that they won’t ever see, and cover themselves in debt. A company that in a period where sexism and misogyny are hot topics and everyone is trying to do a better job, vs a company that comes out with an advertisement about “hot chicks driving you home”. A company that has a media problem and tries to fix it, vs a company that insults people when that problem arises.
Also note that this doesn’t mean that everyone in the company is a bad person. Even if we refer to “Uber”, when we talk to individuals there’s no specific blame until proven. It means that the company has a specific culture that is statistically more likely to attract and have a specific attitude internally. And since company culture, even more in startups, comes from the leads, we don’t have to go much further than the founder and CEO Travis to see where the ethical issue comes from:
“OMG so f’ing EVIL OMG OMG… i can’t believe this shit, so horrible holy shit”
— Travis Kalanick just in time for Xmas 2013
Let me spend an extra word now on the topic of “Surge Pricing”. Surge pricing is an incredibly controversial element of the pricing logic of Uber where to “compensate” for having less cars, they raise prices. In purely economical terms, the drivers are a scarce resource, even more in peak time. So there’s surplus of demand, and that surplus means that someone won’t get a car. So surge pricing does one thing: instead of getting people on cars with the logic of first-come-first-served, which doesn’t discriminate people by how much money they have, they use the logic of raising prices. A logic that discriminates people by how rich they are. So in one case everyone has equal chances of getting a car, in another case just the rich people can.
That’s a fundamental difference, and of course it’s something that Uber doesn’t want to highlight, because of course the second dynamic means more money for them. It’s way better for Uber to justify this by saying that gets more drivers on the streets, of course. Until…
“UberX is very close to SURGE. It’s Valentine’s Day! People will be out all night and we didn’t activate new drivers to make earnings even higher this weekend.”
— Ben Popper (2014) Uber kept new drivers off the streets to increase fares
These dynamics however have multiple effects, and it’s fascinating how many people accept Uber’s explanation. My guess is that surge pricing sounds a lot like “free market” (which is not, these are all drivers working for a single company, remember?) so it gets a free ticket in this capitalistic and consumistic western society. But that doesn’t change the truth of it: the model of surge pricing is elitist at its root.
Why I mentioned this element of surge pricing under the ethics lens? Because while it’s “just business” and there’s nothing unethical in that — as much as there’s nothing unethical in the fact that the society hasa huge salary gap between rich and poor — the dynamic is there, and has ethical consequences.
Not just that: it also shows on which side the company exists, and what kind of culture it endorses. Once you factor this cultural element in, you might not be surprised to hear that Uber, and USA company, does surge pricing, while Hailo, an European company, doesn’t. By the way: have you ever wondered why there are laws that regulate pricing? Exactly. Protect the consumers. I’m sure that you wouldn’t trust the cab drivers in a city where they were allowed to do the price they wanted at will.
It’s also not surprising at this point reminding that Uber started as UberCab a company that used to hire luxury cars for a premium price (about 50% more).
Elitist, 1%ist, misogynyst, insulting people, unlawful, vindicative against journalists, anti-competitive. This isn’t just an aggressive company. This is an unethical company. That however is using a great business model, executing very well and aggressively, and helping change old laws.
I’m sorry for all the people that work inside there and they are different from the company culture itself. I’m aware you exist. And I’m sure you don’t like these kinds of dissecting. But there’s unfortunately no way to talk about this and at the same time making a clear distinction for you all, and that doesn’t change what your CEO does, and what the company does as a whole. I’m sorry.
In the end, it’s all about culture
Everything comes from the founders, the first people he hired, and everything cascades down from there. Uber is a prime example, under scrutiny and so clear under the sun, how much the person at the top shapes and crafts the culture of an entire company over time.
We could have good companies, even aggressive and disruptive ones, that are at the same time ethical. These are the companies we should finance and make thrive. Uber? Unfortunately gets two things right, but misses an important third. We need more companies that are able to do good under all the three lenses: good business, disruptive and ethical.
Am I calling then to boycott them? Up to you. I don’t feel to suggest anything, as I don’t feel it can be even remotely effective, because in the end very few people care “as long ans it gives me a benefit” and “as long as it makes money”, depending on which side you are. It’s mostly symbolic. However, you can still think about it, and maybe think about the alternatives you have. These days, it’s likely there are a few.
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