The Sorry Story of Uber

Uber, the torchbearer of the ridesharing industry, debuted on the New York Stock Exchange on Friday, May 10. It lost a slice over 10.56% since the beginning of trading. So what? There have been other, bigger losers in the history of Wall Street. What makes the drop of Uber bad news? To understand the importance of this drop, one needs to see the entire Uber story. While this is well beyond the scope of this article, we will, nevertheless, try to put some things in perspective.

A revolution was born

Uber was founded in 2009 as UberCab by Garrett Camp and Travis Kalanick (who served as the company CEO until 2017). In the 10 years, it has been in existence, Uber has disrupted (for want of a better word and at the expense of being labelled a cliché) the cab industry, defied public opinion, flew under the regulator’s radar and offered the simplest possible alternative to the near-hegemonic cab industry. Riders embraced it.

Uber has raised astronomical amounts of money in the past few years. It raised $8.1 billion through its IPO. However, Uber, bankers and people in the know, believed that investors would fall head over heels to buy a piece of the pie and that Uber might be valued at over $120 billion upon its IPO. That would have made Uber the biggest American company to go public on a national stock exchange. However, their calculations fell flat when Uber stumbled through its first day. When its stock closed at $41.47 (against $45), it's market capitalization stood at $76.5 billion.

What went wrong?

Everybody knows that Uber is fast-growing yet unprofitable. The company burned over $2 billion last year and is not expected to be in the green anytime soon. This is because it has been subsidizing its services in a bid to create a bigger market share. So while institutional investors might bet on this Unicorn for its longevity, the general public isn’t so sure.

During the week leading up to Uber’s IPO, there have been murmurs of dissent within the driver community on the way the company has been shortchanging it for quite some time. Drivers earned on an average $2.2 per mile in 2013; now they earn just over 90 cents. In a bid to make riders happy, Uber is squeezing driver earnings. On the eve of Uber’s much anticipated IPO, Uber drivers organized, what is being referred to as, the “largest ever gig workers protest to date,” and people, and politicians, took note.

Step-fatherly treatment of drivers is hurting Uber

While Uber paid the drivers who joined the platform in the early days handsomely, it has always looked at them as an unnecessary distraction rather than important stakeholders in a growing ecosystem. Travis Kalanick even had the audacity to say that “the reason that Uber could be expensive is (because) you’re not just paying for the car, you’re (also) paying for the other dude in the car who’s driving.” This is a terrifying statement from the head of a company which depends on these “other dudes” to drive their cars so that Uber can make money.

Uber has plans to slowly phase out the drivers and bring in self-driving cabs that, it believes, will complete the technological cycle it had originally envisaged when it started operations out of frustration of the cabbies, in the first place. But to rely on an unsure technology while distancing drivers may prove to be fatal to the company.

Drivers of these ridesharing companies are caught in a terrible situation — cursed if they do and damned if they don’t. While the call for a strike came many days prior, many drivers couldn’t simply turn off their app and participate in the strike because “they needed the money.” It has become a truly untenable situation and the drivers are facing the brunt, while Uber is mollycoddling investors to put in money in the hopes of a better future.

So, if the situation is so alarming, and it is across the board with many other ridesharing apps as well, is it the end of this revolution? Certainly not. If we can identify the true stakeholders in this ecosystem, it is possible to create a platform that does equal justice to all. It is a no-brainer that drivers are as important for the ridesharing industry as are riders. So shouldn’t a platform provide enough, and more, incentives for drivers to be a part of a sustainable ecosystem that takes care of their living and also provides high-quality service to the riders?

How will the solution look like?

Drife seeks to do just that. A NexGen ride-hailing platform, Drife is built on the immutable blockchain technology that works on the basic tenets of democracy, transparency and decentralization. The Drife ecosystem empowers drivers to make a decent living by charging transparent and honest fares without the fear of parting away with any kind of commissions. The decentralized nature of the platform means that there is no central authority that will charge commissions. So drivers earn what they truly deserve.

Riders, on the other hands, get to ride on cabs knowing that the drivers are a happy lot and there won’t be any kind of mischievous charges, like the awful “surge pricing” charged by the current ridesharing platforms when cab demand is more.

Drife aims to build a community of all stakeholders that will be self-sustainable; a community where each member seeks to help the other and earn rewards for their good behaviour. Its aim is to create a system unlike the capitalist systems of current ridesharing companies that turn a blind eye towards drivers’ plight in order to support their bottom line.

Parting thoughts

One of the placards held by drivers at the recent strike summed it up nicely. It said, “Invest in our lives, not in their stocks.” It was a clarion call to riders and other members of the society to pull down the incumbents from their high thrones and show them the realities that are plaguing them. If unaddressed, Uber, and it’s followers, may go down in history as the worst “best companies” that had the power to empower and yet failed miserably.

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