Uber drivers frequently protest their declining pay and it strikes me that there was an uproar over how Uber treated its drivers and that was part of pushing out their founder CEO, but things have actually gotten worse for drivers since then.
For instance, many work 12 hour days earning less than $100 per day. Uber used to take 20% of the fare, now drivers report giving up 60%. Back then they might earn $400 per day.
Pre-summer 2017, drivers had several complaints.
- Drivers didn’t have any choice in trips. They’d find out once they accepted the ride (and cancelling on riders once they learned the destination could get them kicked off of the platform). This was a solution to a real problem with taxis.
In New York City you stand there and hail a cab and if you’re going someplace the driver doesn’t want you to go, they move on and you keep trying. Cabs would often redline, refusing to take certain minorities or drive to minority neighborhoods.
- Drivers didn’t like the pay, since Uber was paying less than when it first launched and needed to onboard them.
- Drivers wanted tips, not understanding that tips don’t raise wages they are a mechanism for companies to lower them. If someone is willing to drive at a certain price (everyone on the platform already was willing to do so), and customers start tipping, the company can pay less to offset that and still have enough drivers.
Uber had resisted tipping, preferring a ‘seamless experience’ where you request a ride and are billed for it automatically without an additional transaction at the end.
Driver complaints weren’t the only beef with Uber. They paid $4.4 million to resolve sexual harassment and retaliation in the workplace complaints. I wrote of Uber back in 2014 that “they have a great business model, they’ve grown too quickly, and their corporate culture hasn’t kept pace with their growth.”
Customers railed against surge pricing even though back then it was a way of getting drivers on the road, and drivers kept most of the extra money.
Now Uber has been less transparent and no one complains about surges anymore. Instead of telling you they’re charging 2 or 4 times as much for a ride, they just quote you a price that’s 2 or 4 times as much. And Uber keeps most of it. They have tipping, but they pay drivers less.
Uber has largely turned around the toxic narrative, but not by becoming better for drivers or riders, and with several rounds of layoffs behind them I’m not even sure how much better for employees?
They’ve become on-demand transportation that’s often more expensive than a cab. They deliver cold food that takes too long to get and now often makes stops between picking up your meal and bringing it to you. And they’re very little else. Uber once had a vision far beyond transportation. They’d be intimately involved in moving people and things around cities. That would put them at the center of peoples’ lives.
- So it made sense when they launched a rewards currency and a co-brand credit card that they might succeed with their own digital currency that was interoperable, far beyond Uber’s own ecosystem.
- It would be a real currency, leveraging Uber’s reach and brand, that had uses in meat space far more practical than crypto.
Yet Uber has largely given up on its ambitions. I suppose that was the inevitable consequence of appointing the CEO of Expedia, of all companies, to replace their ousted founder. Expedia hasn’t meaningfully innovated for customers in a quarter century.
Instead, Expedia is a company that advertises to generate traveler eyeballs and sells those eyeballs to hotels – the hotel is the customer not the consumer. Expedia even has a history of taking a weak rewards program and making it continually worse.
Uber’s ex-Expedia CEO went undercover as a driver and doesn’t even like his customers (“some customers’ behavior unpleasantly surprised Khosrowshahi…riders discussing personal problems or confidential corporate information as if they were the only people in the car — made him feel slighted.”).
Not only did Uber largely leave its credit card deal dormant, never even advertising it in-app or during rides, they gave up on the card. The card was the primary way their currency was being minted. They also gave up on their rewards program and offering elevated service to their most frequent riders.
Fundamentally the business Uber is in is hard because it has to entice both sides of the market onto the platform. If they give too good of a deal to riders, drivers balk. If they do too well by drivers, riders exit. That was fine when they were happy lighting VC money on fire – it made up the difference. Not so good now.
I use both Uber and Lyft. I have my monthly Amex credits, and I enjoy earning 10 Chase points per dollar with Lyft, plus Bilt points, and ThanksAgain points. Sometimes one or the other offers faster rides or better pricing.
I have to remind myself how bad taxis were (and are) because Uber is so frustrating. Taxis were always limited in number by regulation, so there were never enough. They were hard to get. You’d spend time flagging them down on the street (in the rain and cold) and then they might not even want to go where you were going. Once you got one the car was invariably in poor condition, because they earned the same amount whether it was well-maintained or not.
So Uber is great compared to taxis but that’s something they accomplished a decade ago. Uber changed on-demand ground transportation but then it settled. For all of its sins, it used to be an innovative company and now it’s not. And that part at least is worth lamenting.
Since the company is living off of past innovations it’s had to improve its financials by squeezing both sides of the platform, drivers and customers, instead of growing into profitability.
Uber is now in the S&P 500. That doesn’t make them a great company. It puts them alongside Union Pacific; Altria (Philip Morris cigarettes); General Motors; ADM (look up their past scandals); Equifax who leaked all your data; and Dominos (pizza).
For years, I only ever used Uber. I didn’t even give it any thought. I just pulled up the app and away I went. Increasingly, Uber is unreliable. Not just cancellations but wait times, no cars being available or insanely high prices unless you just want an Uber X. Now, I find myself taking taxis. It’s like taking a time machine back to before Uber. Except now taxis are generally newer cars. Often much newer than an Uber X. And all the taxis, at least here in the USA, take credit cards. Many taxis also offer flat rates from airports to downtowns. So, they’ve made Uber less attractive. For me, Uber is really only the default option when I’m traveling to a foreign country as I don’t need to know the language or worry about being ripped off.
I made a promise to myself I will never take a yellow cab again ! I travel alot and remember arriving into LGA or JFK and spending hours trying to get a cab home ( in the rain freezing weather etc. ) in queens ! No one would take me. There is poetic justice uber and Lyft cane along. I’m happy. !
Interesting comment from @FNT Delta Diamond: “Except now taxis are generally newer cars”. For sure I won’t refute it, partly because that comment is probably city-specific, and partly because I don’t have any data. That said, I can recall the pre-Uber days with Taxis being the only option, and I can vividly recall those Taxis by and large being disgusting. So bad as in you felt you needed to take a shower after riding in some of them. In any event, I’m a Capitalist: Gary makes some excellent points about Uber, but at the end of the day, I prefer them to Taxis (at least in Austin).
I tip Uber drivers cash and I tip taxi drivers cash. I am glad to have them driving when I use them.
When Lyft went “woke” and “BLM”, I closed my account. Just drive the cars, keep your political opinions out of the business. I have used Uber here at home, in Asia and Europe. The prices for Uber in London are about the same as a “black cab” but I don’t have to flag an Uber down. I have noted that here in my home town, a confirmed Uber ride has cancelled my trip (more than once) and I have to then try again to get an Uber. I don’t know what the answer is but Uber has strayed away from their initial good service and good pay. As far as tips go, I have started paying my Uber & black cab tips in cash…coin of the realm. That money goes straight into the pocket of the driver and they don’t have to pay taxes on it…because it’s not posted on a 1099. So, Uber…get your s**t together. Go back to the model that works and quit squeezing the drivers to leave and the customer to balk.
Uber’s real model was self-driving taxis. This was similar to how Netflix was a DVD rental company, spending millions on postage, to gain market share. Everyone laughed. Then when the company dominated movie rentals Hastings shifted the company to streaming. Boom! Overnight they were profitable.
Uber and Lyft tried to do the same thing. Enter an established business with a low price and convenient way to interact with the company. Pick up market share but lose money. Then, when the technology catches up to your vision, you’re instantly profitable. In the case of taxis, the biggest expense is drivers. Get rid of the driver and your margins pop. Problem is, autonomous automobiles are a tougher nut to crack than increased bandwidth to homes. The cash burn rate wasn’t sustainable so something had to be done to stop the red ink.
I have screenshots where uber has paid me $16 for driving someone, and they pay themselves $14, then take rest rest of the fare in fees, taxes and a made up insurance charge. Uber will also start drivers off with good pay for a few months to hook drivers and encourage them to drive full time. Then month over month, they lower the pay until you cannot maintain your car, but you are stuck.
Their problem was they pandered to unskilled labor demands, instead of customers…even while they were losing billions. Stupid move, as there is no shortage of supply of unskilled labor.
Doesn’t matter, autonomous tech will kill Uber soon, as the tech providers will own the relationship, not the middlemen like Uber. Unskilled labor better go back to school. Poof, you’re obsolete.
@GaRY: This description totally at odds with reality. A simple AI query:
Here is a summary of Uber’s annual net income (profit or loss) from 2014 to 2023:
2014 to 2018: Uber was a private company and reported significant losses during these years, reflecting high spending on global expansion and competitive strategies.
2019: Uber reported a loss of approximately $8.5 billion, which included costs from its IPO
UBER INVESTOR RELATIONS
STOCK ANALYSIS
.
2020: Losses narrowed to $6.8 billion, partly due to restructuring and cost-cutting measures during the COVID-19 pandemic
STOCK ANALYSIS
.
2021: Losses further reduced to $496 million, aided by gains from investments
STOCK ANALYSIS
.
2022: Uber posted a loss of $9.1 billion, driven largely by investment-related impairments
UBER INVESTOR RELATIONS
STOCK ANALYSIS
.
2023: Uber achieved its first annual profit, with a net income of $1.9 billion. This was attributed to operational improvements and gains from equity investments
UBER INVESTOR RELATIONS
STOCK ANALYSIS
.
This trajectory illustrates Uber’s shift from aggressive spending and expansion toward sustainable profitability.
L3 demonstrates that AI is only a threat to humans in that it is making people dumber. Nothing you posted refutes anything. Try again, and maybe try just using “I” this time.
It’s certainly true that Uber has become awful for passengers and drivers. When I’m in a city where taxis are an option I’ll do that every time since the price is about the same these days and I’m not aiding Uber in screwing people over that way.
The elephant in the room is simple
It’s non existent customer service if there is a problem with uber driver the rate etc
Poor diver pay and higher pricing than a taxi
In one airport an uber x was 60 dollars to go less than 5 miles
Taxi was 16 plus tip
Folks still lined up like cattle to overpay as they are addicted to uber and their phones
Many taxis sat empty while folks waited for half an hour for an uber
Hopped into a taxi problem solved
They have you by the balls. So don’t expect it to change for the better.
I live in a town that, before ride shares, you could order a cab and not know if or when you’d see it. Uber/Lyft changed that. I still often take a cab from a new-to-me airport. I’ll pay the premium to not have to navigate where ride share pickups occur.
I was an UBER early adopter. It was GREAT vs. the taxis! But forget about surge pricing (which I think is fine), it was when I was at SFO and a colleague and I got the same UBER, and mine was $15 more, because they were testing dynamic pricing based on your profile (and I did usually get Uberx).
Now? I just take a taxi- where taxi’s are readily available. I never have to wait, and oh yeah, they are *required* to take you were you want to go.
-Jon
ps- @Gary, when Uber 1st launched, Drivers *LOVED* the extra pay and rewards (Uber needed drivers, so lots of incentives to get drivers) That’s a fact- drivers made more money in the beginning, you are saying they did not?
The taxi’s at IAD are good, I always take one when I return home. Uber pricing is all over the board at the airport.
@Jon Biedermann – “drivers made more money in the beginning, you are saying they did not?”
No, the reverse…
My largest frustration is I “confirm” a ride and a price, and it is usually at that point stating that the wait time will be x minutes (usually 2-5). After the driver is appointed, wait times go UP by as much as 15 minutes – AND I have no control except to cancel and start again (more time wasted). A driver just a few days ago told me it was because she ‘received another ride’ that was nearby in the interim. Is that her excuse for accepting another ride, or do we have a new barrier with which to deal. I’m an Uber One member.
@morningglory201, a driver cannot accept another ride unless they cancel you first. Whoever said she’d gotten another ride after acceptors is completely false. I drove 8 hours today and trust me there are times I’d love to cancel a ride but it is not becauyUber offered me another ride.
The single best advantage of the Uber has been the ability to travel around the world and not have to deal with currency issues or translation issues. I get to expense these trips, but there’s no doubt that they they they have become expensive. All that low/no interest VC money is gone
I find it funny when I see people at the airport waiting a long time for “their uber” and I just hop in a cab and go. And probably pay less. People are dumb.
Those early years Uber burned through 60 billion of investment money to create a monopoly. Now they make a tiny profit sometimes.
They disrupted an industry that badly needed disrupting. Now they are the behemoth and have their own issues. The prime issue with taxis was wondering when they would ever show up; now, uber will tell you a ride is 3-5 minutes away, except once you have accepted it suddenly jumps to 15 minutes. Alternatively, the car “5 minutes away” may inexplicably stop for 10 minutes (coffee? bathroom break?), but cancel and you get charged a fee (good luck with uber customer service). Then, you have the price issue. With taxis, there is no “middle man,” but there was a monopoly so prices were high. With Uber, they must take their cut so in a newly competitive market they will necessarily have higher prices than taxis.
Also, tips suck. Sorry, I don’t have the option of asking customers if they could instead give me 1/3 of my wages in cash so I can evade taxes. I resent the businesses that cannot be bothered to pay their staff a living wage, and get annoyed at the staff who think a cash supplement for simply doing their job is an entitlement.
You should not have to tip someone for doing their job of driving. We don’t tip bus drivers or pilots.
I used Uber on a split trip (another Uber customer rides with you for part of your journey). Only got a $1.50 discount…not happy!!
For my last two Uber trips, I paid the tip with cash. Both drivers seemed very, very happy!!
A buddy of mine is a Uber driver. He tells me the richer the passenger claims to be, the smaller the tip (if any)…not happy!!
My move left my car in storage for several weeks. I’ve had to Uber here in St Charles County. I’m old fashioned not fond of technology as it continues to put more people out on the street. I never had to live in a big city dependent on taxi service and it was shocking to pay 80$ for a ride from my home thirty minutes from the airport. So to beat the fleet we have ‘voila’ Uber.
I find Uber more reliable than Lyft. In Miami finding an English speaking driver is impossible. My hunch is that a lot of their drivers are illegals that have limited employment opportunities.