Uber’s Troubles Start with Not Knowing What Business It Is Really In

Rob Enderle

Uber is imploding. Everything from massive financial losses to a culture of harassment ensnaring its number-two executive, to an IP theft lawsuit with Google, and increasing problems with drivers is well covered.

But how could a company go so far off the rails? I think it comes down to a new mentality with young adults coming to work with business concepts that are closer to confidence games than real business plans and a near sociopathic approach to customers and employees. I also think it comes down to getting nearly completely wrong what business the firm is actually in. Uber isn’t really a ride-sharing company. Its customers are ride-sharing companies, or drivers, and it clearly doesn’t get that.

I think this trend of not really understanding your own business is a bad one. Uber is hardly the only firm that seems to have lost its way of late.

Uber in a Nutshell

Basically, Uber’s model is volunteers do the work and Uber makes the money. It is a common model. Supporters call it the “sharing economy,” but it really comes down to a third party making money off the time and financial investment of others. The advantage to the firm is a very low relative capital investment, the elimination of most typical employee care costs, and what looks like a machine that effectively prints money.

The unofficial promise is that everyone works and shares in the benefits of the work, but the Uber drivers get little say on what Uber actually does and they don’t even get the same protection as normal employees.

Goals then focus on maximizing revenue and profit. While most companies would have a strong employee interest offset, either naturally or driven by unions, at Uber (or firms like it), that doesn’t exist in any form, assuring a sociopathic management style where the people don’t really matter. It also seems to corrupt ethical considerations, as those who have real jobs, particularly managers and executives, place themselves into a status level where rules don’t apply.

Part of the problem is that I think Uber thinks of the riders as customers. They aren’t. The riders are customers of the drivers who serve them. Uber customers are actually the drivers. This suggests that Uber’s plan to eliminate the drivers with autonomous cars is far more problematic than it currently seems to realize.

If all you are focused on is performance, then things like IP theft, harassment, and doing the right thing for your folks tend to fall by the wayside, and that is what we are seeing at Uber. The model appears to promote a set of behaviors that are not at all good for the long-term survival of the company.


Fixing Uber

How do you fix a problem like this? You start by changing the revenue generators from cost centers to true partners. If you make the drivers employees, you have a cab company, but nothing says you can’t award them with stock ownership for a job well done and make them into owners. You also network and manage them like any resource, not just to assure quality, which is done, but to ensure that they aren’t starving. You make a significant effort to keep people who won’t be successful from the service but, once in, you make a significant effort to assure that they are successful. This includes wrapping them with services that allow them to function as if they were a group rather than individuals. In short, you assure that you have happy drivers as much as possible.

You start by effectively turning Uber drivers from the problem into a more effective part of the solution. Then you drive that employee-friendly attitude up though the company. To gain empathy, most Uber managers should spend time as an Uber driver on a regular basis. I’m sure they use Uber, but as a driver, you’ll get a better sense for what is working and what isn’t. And it works against this perception that employees, and particularly managers, are some kind of an elite class.

Wrapping Up: Fixing the Business Plan

A business plan for a firm that makes money off of assets that belong to others and volunteer workers is problematic because it breaks from well-known business models that, normally, assure employee care and ethical behavior. It also screws up views on who the customer actually is and can create a toxic environment where managers in power appear to believe that normally accepted business and behavior rules don’t apply to them.

Fixing this has to begin with getting management to realize who the customer is, actually getting a feel for the work, and stopping the prioritization of plans to eliminate these customers (which is pretty insane, if you think about it).

I also think fixing Uber will require someone to realize what Uber’s business really is. It isn’t a newfangled cab business or just an app company. It’s a services company that helps people work for themselves. If it were to just grok that one thing, I think Uber could be recovered relatively quickly.

Rob Enderle is President and Principal Analyst of the Enderle Group, a forward-looking emerging technology advisory firm.  With over 30 years’ experience in emerging technologies, he has provided regional and global companies with guidance in how to better target customer needs; create new business opportunities; anticipate technology changes; select vendors and products; and present their products in the best possible light. Rob covers the technology industry broadly. Before founding the Enderle Group, Rob was the Senior Research Fellow for Forrester Research and the Giga Information Group, and held senior positions at IBM and ROLM. Follow Rob on Twitter @enderle, on Facebook and on Google+


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