What’s gone right for Uber in 2017? Well, its autonomous cars are welcome on California roads again after getting kicked out of San Francisco last year (… but the company is being sued over claims that it stole Google’s self-driving car tech). Uber recently managed to poach Google’s former head of search, Amit Singhal, to lead its engineering division (… but Singhal has already been pushed out because he failed to disclose sexual harassment allegations that were brought against him at Google). I suppose there are probably still people out there spinning MadeinTYO’s “Uber Everywhere” (… scratch that, it’s now “Lyft Everywhere”). Within every gray cloud at Uber, there is a silver lining that is actually a lightning bolt about to start an electrical fire.
Uber has had an awful year in terms of PR. But it’s not clear how deeply the company’s many controversies — the “unrestrained” work culture, the sexual harassment claims, the broken HR department, the regulation-dodging fake Uber, the resignations, the awkward video of CEO Travis Kalanick dancing to Maroon 5 — are affecting its business. It’s tough to know, since Uber is a private company that doesn’t have to disclose much information to the public and has a vested interest in maintaining the narrative that its breakneck growth is inexorable. But by examining third-party data, news reports, and the people who follow the ridesharing sector closely, we begin to get an understanding of how the Uber fallout is affecting different stakeholders. The takeaway: Uber is not doomed, but it’s certainly more vulnerable than it was a couple of months ago.
Uber’s compounding controversies reached a breaking point for many people in late January, when the company was accused of meddling in a taxi strike at JFK International Airport the weekend that Donald Trump’s travel ban took effect (the accusation was ultimately unfounded). #DeleteUber took off on Twitter, and at least 200,000 people deleted the app from their phones. That’s a drop in the bucket for a company with 40 million monthly riders and millions more app downloads, but the negative reaction was fiery enough to compel Uber to email customers addressing the controversy and even target people on social media who engage with the ACLU.
It’s less clear what impact Uber’s subsequent controversies have had on ridership. Lyft briefly surpassed Uber in daily downloads following the travel ban, but Uber retook the lead and the company’s downloads have been stable ever since, according to App Annie. #DeleteUber has been tweeted more than 412,000 times in the last three months, according to social media analytics firm Keyhole, but 222,000 of those tweets came on January 28, the day of the JFK controversy. The hashtag got a small bump the week after former Uber engineer Susan Fowler wrote a blog post outlining the company’s internal HR problems, but today it’s pretty much faded out of use.
For drivers, the most damning piece of Uber news this year has probably been the video of Kalanick arguing with one of his own drivers at the end of a trip. The money quote comes from Kalanick, after the two debate Uber’s falling fare prices for a couple of minutes: “Some people don’t like to take responsibility for their own shit. They blame everything in their life on somebody else.” (The driver rated Kalanick one star after the trip.)
The video was probably less revelatory than reaffirming, according to Harry Campbell, an Uber driver and founder of The Rideshare Guy blog. “I think some of the sentiments that came out in the video with Travis arguing with the driver … a lot of drivers sort of already know that about Uber,” he says. “They sort of feel like Uber’s success is monumentally greater [than their own]. Their valuation has risen all the way to $70 billion, whereas drivers are sort of trending the other way, frankly.”
But Campbell doesn’t expect a mass exodus of Uber drivers anytime soon. Anecdotally, he says that though drivers have seen an uptick in Lyft ridership, Uber rides haven’t fallen. “Uber is just as busy as it ever was,” he says. “I don’t know that they could have a worse month of press, and honestly I don’t know that it had a huge impact on their business on a day-to-day rides basis in the short term.”
As the largest venture-backed startup in the world, Uber has an all-star list of investors that includes Google Ventures, Goldman Sachs, Fidelity Investments, and Jeff Bezos. These big names have mostly stayed silent about the company’s compounding controversies. But a lesser-known pair of early angel investors, Mitch Kapor and Freada Kapor Klein, penned an open letter calling for other investors to speak out against Uber’s “culture plagued by disrespect.”
“Investors in high growth, financially successful companies rarely, if ever, call out inexcusable behavior from founders or C-suite executives,” the pair wrote. “We are speaking out publicly, because we believe Uber’s investors and board will rightly be judged by their action or inaction.” Chris Sacca, another early investor, also criticized the company at South by Southwest over the weekend.
While individual investors have spoken up, the institutions that fill the majority of Uber’s coffers remain silent. Uber’s growth trajectory is unprecedented in Silicon Valley, so investors are reluctant to do anything publicly that could affect its success and the massive windfall they’ll reap when the company goes public. Today, though, Uber investors probably have a better ability to affect the company’s culture than they ever have or will. If Uber follows the lead of tech companies such as Facebook, Google, and Snapchat, it may allocate nonvoting shares to the public when it begins selling stock, ensuring that its founders maintain primary control over the company’s direction permanently.
I like to imagine Lyft has a news ticker somewhere in its office that just cycles through negative Uber headlines. Uber is, after all, the company that hired an army of contractors to set up dummy Lyft accounts with the express goal of hailing rides and then recruiting drivers to Uber from the backseat. (Lyft also accused Uber of getting its rideshare double agents to book and cancel thousands of rides to make Lyft more inefficient, but Uber denied this claim.) There was definitely a little bit of knife-twisting going on when Lyft magnanimously announced it would donate $1 million to the ACLU during the weekend of the travel ban, just as the Twitter pitchforks were turning in unison against Uber.
Lyft’s role as an Uber foil appears to paying off from a business standpoint as well as a PR one. According to TXN, a consumer spending analytics firm, Lyft’s share of the U.S. rideshare market increased from 16.5 percent to 20.9 percent after the #deleteUber campaign. Lyft’s share ticked up slightly again the week following Fowler’s blog post, to 21.3 percent. Because Lyft offers a service that is largely identical to Uber, customers in many markets can quit Uber for ideological reasons without having to change anything about their lifestyles. As long as Lyft is around, boycotting Uber can’t get much easier.
Perhaps Uber’s the biggest threat is that it won’t be able to attract and retain the best talent in Silicon Valley as it attempts to aggressively expand its footprint in emerging technologies. Numbers are hard to come by, but there have been multiple anecdotal reports about more Uber employees sending résumés to recruiters or planning to leave after the company issues bonuses this year. Several high-level executives, including the company’s AI chief and two leaders of its self-driving-car initiative, have already departed this year. The threat is not that Uber will one day be usurped by Lyft, but rather that Uber won’t be able to leverage its massive momentum in ridesharing to take on Google in driverless cars or Amazon in product delivery. Uber wants to be a world-beating tech giant, but the jury’s still out on whether it will be able to convert enough workers to adopt its take-no-prisoners attitude — or change its own attitude as it continues to expand.