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Uber is becoming a monopoly. It should start acting like one.

TechCrunch Disrupt SF 2014 - Day 1
Uber CEO Travis Kalanick needs to rethink the company's culture.
Photo by Steve Jennings/Getty Images for TechCrunch

Last month, Uber announced that it was settling two big driver lawsuits that could have forced the company to recognize its drivers as employees rather than independent contractors. In a post titled "Growing and growing up," Uber CEO Travis Kalanick argued that it was "time to change" Uber's relationship with drivers, offering drivers more transparency and due process.

Uber should make these the first steps toward a broader rethinking of the company's public image and the way it does business. Uber began its life as a scrappy startup trying to break up the taxi cartels that dominated most of America's big cities. When Uber was a clear underdog, many people appreciated the company's rebellious streak. Without it, the company probably wouldn't have survived.

But Uber is no longer an underdog. It's a huge company, and it's likely to become more dominant in the coming years. And when a company with real power behaves like Uber circa 2013, it doesn't seem scrappy. It seems menacing.

And that's a problem because Uber has ambitions to become much more than just another taxi service. Uber wants to become a kind of transportation utility — the default way that people and goods move around a city. That would make Uber one of the most powerful institutions in our cities.

But if Uber continues to be seen as a bull in the china shop, its growing authority will inevitably become a source of concern from voters and public officials. If Uber wants people to be comfortable with it wielding that kind of influence, it's going to have to become a company that people trust and admire. Yet Uber still seems focused on maximizing short-term profits rather than the public interest — and ironically, that approach is likely to make Uber less successful in the long run.

Uber should think a lot harder about its public image

New companies need to think about growth and achieving profitability. But often, successful companies reach a point where they generate profits reliably enough that they can relax and think about larger strategic issues.

One of the most important things big companies have to think about is their public image. And different companies have chosen to handle this in different ways. Some companies — think about technology companies like Amazon or Apple, for example — are beloved by customers for their well-designed products and excellent customer service. Others — think especially about telecommunications providers like Comcast (whose NBC Universal subsidiary is an investor in Vox Media) or Verizon — are disliked by many customers who have little choice but to use them anyway.

Right now, Uber's reputation is in an awkward limbo between these two extremes. On the one hand, many people love Uber's service, and admire the company for its role in opening up the taxi market around the country.

On the other hand, Uber has had more than its share of bad publicity over the years — allegedly spying on customers, threatening to dig up dirt on journalists, and downplaying sexual assault concerns. Uber's surge pricing — which can lead to customers paying up to nine times the normal fare — is also a source of continued frustration among some customers.

The public's ambivalence means that Uber has more opportunity than most companies to reshape its public image. If Uber makes a concerted effort to improve its public image, it could cultivate a reputation that's more like its Silicon Valley peers. On the other hand, if it ignores the issue, it could be one or two scandals away from a more toxic public image.

And Uber's public reputation also matters more than it would for most companies because Uber is a lightly regulated company in an industry — transportation — that has traditionally been heavily regulated. If Uber succeeds in its goal of becoming a more and more important part of America's transportation system, it is going to face greater scrutiny from regulators. A good reputation for the public will be invaluable as Uber tries to shape the laws to its own advantage.

Uber should work harder to keep drivers happy

Uber's relationship with its drivers has emerged as a key point of controversy. Many drivers, of course, love the flexibility and independence provided by Uber's just-in-time model. But others — especially those allied with the labor movement — have grown dissatisfied. They fault Uber for its arbitrary and opaque process for removing drivers from the platform. And more broadly, they fault Uber for failing to provide its drivers — even those who effectively work for Uber full time — with the job stability and benefits they would enjoy if they were legally considered to be Uber employees.

Uber has flatly rejected calls to make its drivers employees, arguing persuasively that switching to a formal employer-employee relationship would be bad for both Uber and its drivers. A fundamental aspect of an employer-employee relationship is that the employer sets the employee's schedule — yet for many drivers, the ability to decide when and where to work is a big selling point for the Uber platform.

At the same time, Uber could be doing more for its drivers. Uber tacitly acknowledged this when it announced its settlement with California and Massachusetts drivers. Some of the company's key concessions — including an official policy on driver deactivation and an appeals process for unjustified terminations — are taking effect nationally, not just in California and Massachusetts. That's because they weren't really "concessions" — they were ways to improve driver satisfaction, which benefits Uber in the long run.

But there's more Uber could be doing here. As part of the settlement, Uber agreed to fund drivers' associations in Massachusetts and California that could serve as a forum for drivers to raise grievances with Uber management. But there's no reason to do this only in those two states — forming such organizations in all 50 states would be a good way to make sure drivers nationwide have an effective channel for raising concerns, promoting driver satisfaction and benefitting Uber in the long run.

And while it doesn't make sense to make Uber drivers formal employees, there's more Uber could do to reduce the volatility of driver earnings. When I drove for Lyft, the company had a promotion where they guaranteed that drivers would earn a minimum amount if they drove at least 50 hours, including 10 hours during peak times. Uber could adopt a similar policy, ensuring that its most loyal drivers don't have to worry that a light week will make it hard for them to pay the rent. (Uber does offer its riders some earning guarantees but they're much more limited.)

Improving the driver experience isn't just important because it will help Uber recruit and retain drivers — so long as the labor market remains weak, recruitment isn't a big challenge. The bigger issue is that hundreds of thousands of satisfied, loyal drivers could be a powerful political weapon. Happy drivers are going to be more willing to mobilize on Uber's behalf in cases where the basic ride-hailing business model is threatened by regulators.

This is something that major telecommunications companies like Verizon understand.

Verizon and the labor unions representing its workers have their share of conflict over pay, benefits, and working conditions. But at other times — like the recent fight over network neutrality regulations — the Communications Workers of America have been a key ally of major broadband providers. After all, a labor union of telecommunications workers can only prosper if telecommunications companies are economically healthy.

Uber and Uber drivers, similarly, have a shared interest in seeing the ride-hailing business succeed. And Uber drivers are much more sympathetic advocates for the Uber business model than Uber management. So ensuring that Uber drivers aren't just satisfied but enthusiastic about Uber will pay political as well as economic dividends.

Uber should end surge pricing

Another major Uber flashpoint is over surge pricing. Many riders have a visceral negative reaction to the idea that they could be forced to pay three, five, or even nine times the standard rate during periods of peak demand.

Once again, Uber has refused to abandon variable prices. And once again, Uber has a valid point: If Uber charged the same rate at all times, the service would suffer from massive driver shortages during periods of peak demand.

Yet there's a straightforward way that Uber could preserve the benefits of variable pricing while blunting the backlash: Use discounts rather than surcharges. Instead of setting a low standard rate and then charging multiples of that amount during periods of high demand, it should set a high standard rate and then offer generous discounts at times when demand is low.

The actual prices charged under this system might be identical (except during periods of very high demand). But customers get less angry about a company cutting prices unexpectedly than raising them. This is why restaurants and bars offer half-price happy hour specials instead of doubling prices on Friday and Saturday nights.

If Uber isn't ready to go that far, an even simpler step would be to shift its pricing so that 100 percent of surge pricing revenue goes to drivers. That would make Uber's argument that surge pricing is needed to get drivers on the road more plausible.

Uber should expand into offering paratransit services

Uber's goal should be to become a universal public utility. And one thing public utilities do is provide service to everyone.

One way Uber can make this point while generating positive publicity for itself and developing better relationships with public officials would be to expand its service to disabled riders. Last year, Uber launched a pilot program for disabled riders in Austin, Texas. But the company continues to face criticism from disability advocates for doing too little to ensure that its service is accessible to disabled customers.

But there's room for Uber to go a lot further. The Americans with Disabilities Act requires transit agencies to provide disabled customers with paratransit services to help them get to and from bus and subway stops. These services are very expensive for transit agencies to provide, and they rarely provide the kind of on-demand service that Uber riders now take for granted.

Uber has flirted with becoming a paratransit provider, but the company should do more than flirt: It should start lobbying transit officials across the country for contracts to provide paratransit services. With the infrastructure Uber already has, it should be able to offer services that are a lot more convenient than conventional paratransit, while saving local governments money.

This probably wouldn't earn Uber big profits, but it would have benefits that could be far more important. It would get Uber a lot of positive press for improving the lives of people with disabilities. It would allow them to deepen their ties with local officials whose help they may need in the future. And it could convert disabled people — and the organizations that advocate on their behalf — into key Uber allies.


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