Most birthdays involve cake, fizzy drinks, and balloons. Not so for Uber, which celebrated its 8th birthday in March with a lawsuit, a driverless car crash, and its CEO caught on tape unleashing a tirade at an Uber driver. There’s no doubt Uber is going through a tricky period as it grows up and makes the transition from fearsomely disruptive world-changer to a company that can continue to revolutionize the tech and digital world. The danger is that, if Uber doesn’t get it right, it’ll be driven off the road by a growing number of rivals.
Many forget that at launch, Uber’s app merely offered the ability to hire a luxury car that was more expensive than a cab. It was the launch of UberX in 2012 that led the company to where it is now, coupled with aggressive expansion through strong marketing, driver recruitment, and being ruthless with its early-mover advantage.
Yet as other early movers in the tech world have learned to their detriment – remember Lycos or Netscape – without constant evolution, even disruptors can find themselves stuck in the mud or on a downward spiral to failure. I’m not saying a few bad PR stories suddenly mean Uber’s doomed, but they do mean the company could lose crucial ground to its rivals, all of whom are driving at breakneck pace to be the king of driverless cars.
Uber needs to get out of neutral urgently and get back on the road to the kind of business thinking that saw it help drivers obtain car leases or aggressively cut prices during winter months to grow demand.
The first step is to halt the string of bad press it has had in the last few weeks alone. It’s worth revisiting these quickly. Half a million-people deleted the Uber app in retaliation against Travis Kalanick joining Trump’s advisory council AND Uber failing to take part in a taxi strike against the “Muslim ban.” Not a huge dent in a reported 40 million+ worldwide user base, but worryingly that still represents over 1 percent of users.
Then there’s the Uber exec accused of stealing Google’s intellectual property (allegedly planning to plead the fifth).
And Kalanick’s tirade, mentioned above, against one of his drivers was arguably more damaging to Uber’s public image. More damaging still was the broadside from former Uber engineer Susan Fowler, who wrote a damning blog about Uber’s HR practices, allegedly ignoring cases of sexual misconduct and accusing them of latent and blatant sexism. The charges are, as yet, unverified, but they certainly leave a bad taste in the mouth. More recently, the new diversity report showing Uber’s leadership roles are 89 percent male and 75 percent white isn’t great, but the real damage came recently when a self-driven Uber SUV crashed and was photographed on its side. Significant because Uber’s credibility as a company users can trust with the autonomous future took a big hit.
Ultimately, Uber is the poster-child for the sharing economy, but not currently a particularly pretty one. It is now more associated with greed and predatory behavior than the original sharing-economy ethos of “sharing is good for you, the environment, everyone!”
Uber’s astronomical growth to become a $30-60 billion company (depending who you ask) has come at a cost. As a brand name, Uber is tolerated because it is so convenient, but it’s not very well loved. Using Uber is a guilty pleasure, given that we know how the drivers are often treated and the impact the company has had on regular cab drivers. You can draw parallels between Uber and where UK broadcasting company Sky was a few years back. People disliked Sky but still wanted to be able to watch soccer. As a brand, Sky has improved, but Uber hasn’t. Yet. Add to this the fact that Uber frequently comes up against governments around the world (a key part of its failure to break into China), and you have an organization under pressure.
Uber needs to transition from its current state to something more durable and expandable. Its business model is based on having access to (and ownership of) cheap drivers, and if it loses ownership or is blocked through regulatory changes, the company will find itself rapidly commoditized.
The risk of being beaten by competitors with deeper pockets and broader business models is very real. Self-driving cars are the natural path forward, but the question is whether Uber has the ability to lead this revolution. I predict we will see massive standardization in this space soon, with players such as Google, Tesla, and the large automotive companies sitting down with governments around the world to hash out the rule book for technology and regulation. Will Uber have a seat at this table? If things don’t improve fast, I doubt it.
Johan Hogsander is managing director of UK-based digital transformation consultancy Transform.