Uber can pay its drivers more and increase its costs, or it can try to automate its drivers out of their jobs, but the technology isn’t ready for prime time. From John McNellis at wolfstreet.com:
Its fleet of autonomous cars thus far has gone the way of the Spanish Armada, producing nothing but grief.
While Uber isn’t exactly driving straight to the bank, it may get there yet. The company has ripped through $10 billion to date, but its latest report (Q1 2018) is sufficiently rosy for investors to buy into a $62 billion valuation. How rosy? Uber is losing lots of money, but only half as much as it did in the first quarter of 2017, a ground-rule double for Silicon Valley.
Digging a little deeper, however, these financials reveal a disquieting fact: While the company’s 2017 earnings were up 70% over 2016, its bookings (total income from rides driven) increased by only 55%, a disparity which suggests that Uber sliced away yet a larger share of the pie for itself, cutting into its drivers’ already meager earnings.
To this point, the Center for Energy and Environmental Policy Research at MIT determined in a March 2018 study that Uber has achieved its success the old-fashioned way, that is, on the backs of its workers. The MIT paper concluded that 74% of Uber (and Lyft) drivers earn less than the minimum wage of the state in which they drive. Uber, however, immediately challenged the MIT findings and, somewhat surprisingly, MIT conceded that its methodology might be flawed (a few key survey questions were unclear) and that different approaches to the same data suggested that Uber drivers earn somewhere in the $8-10 an hour range.
MIT asked Uber to release its own internal data to decide the issue, but the company has apparently refused. While this debate should remind us that ivory tower business studies ought to be viewed with the skepticism accorded papal bulls, this paper is buttressed by the fact that, depending on which unreliable internet source you believe, somewhere between 50% and 96% of all Uber drivers quit every year.
But put aside its drivers’ plight for a moment, take a deep breath, and simply acknowledge that Uber is the best thing to happen to transportation since Henry Ford, with the company’s service being to a taxi what a bicycle is to walking. Uber is a runaway success for its users and, in their myopic view, practically perfect just the way it is.
To continue reading: What Future Is Uber Seeing for Itself?