These profit-adverse companies had a year to do the right thing, but they didn’t, which is nothing new.
Uber and Lyft, the king and queen of losing money, have just figured out a new way to piss away more of their fortune. Soon, they will turn off their service in California for months.
They’ll blame Sacramento and indirectly us, the voters who put the lawmakers in office. But these failed startups are solely responsible for what lies on the horizon: the impossibility of finding an Uber or Lyft ride in their home state.
Why? Because the publicly-traded rideshare giants are babies who have never liked laws and loathe the one passed in Sacramento last fall that requires them to treat their drivers as employees.
Let’s Face It: Uber and Lyft Have Never Wanted to Treat Drivers as Equals
These bold disruptors are triggered by the thought that the people who pay for the cars, gas, insurance, maintenance, repairs, inspections, barf bags, internet connectivity, mobile devices and registrations should be treated the same as the bean counters, developers and party bros back in Northern California.
From their Frisco headquarters, the companies spent tens of millions of dollars for more than a year to fight AB 5, and they failed repeatedly.
And now that a California judge finally said they have to start obeying the eight-month-old law, the companies are warning they may have to shut it all down.
Shut what down? Their 10-year bloodletting?
These folks have no problem raising money for every aspect of their business because the potential in this industry is in the trillions.
But for some reason, they hit a brick wall when it came to The Day They Should Have Always Expected — when they’d have to pay for drivers’ health benefits, overtime, vehicle repairs and sick pay. They knew this was a strong possibility a year ago.
But nope. Completely blindsided.
“Uber would likely shut down temporarily for several months if a court does not overturn a recent ruling requiring it to classify its drivers as full-time employees,” Uber CEO Dara Khosrowshahi said on MSNBC last week. “If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly.”
What’s hard to believe is Dara didn’t have his HR dept develop a Plan B when AB-5 was first drawn up.
Other Than Dodging Devastatingly Bad Press, What Were Uber and Lyft Any Good At?
On second thought, of course Uber and Lyft were unprepared for this moment. Other than developing the simple app and muscling their way into markets… what were they any good at?
From nearly day one, Uber was the darling child. An incredible transportation breakthrough that seamlessly filled the gap between expensive taxi rides and driving buzzed (or worse). It became the no-brainer when dealing with the airport. The trips were clean, reliable and, in many cases, fun.
I drove more than 5,000 trips for Uber and Lyft over six years. One of my passengers once said, “I’d be an asshole if I didn’t use this after a night out.”
Then Lyft showed up with their fuzzy pink mustaches; they allowed tipping in the app, and their drivers were somehow funky and more fun.
Uber withstood public relations disasters that would have crippled any other company, like an incredibly unlikable founder/CEO, a senior VP who was equally problematic and a group of employees who used “God Mode” to spy on the movements of rivals, politicians and even Beyonce.
And still, the customer base soared.
People would send their loved ones off in them; pimps would send their, uh, business partners; and groups would cram in together on weekend nights.
Business flourished.
What Kind of Company Fights to Not Know Who’s Driving?
While some people might want to know that the chicken they were about to eat was raised humanely and had friends, the public was not that concerned about who was driving them late at night.
The ingenious rating system was partially to blame. If a driver was bad, give him a bad score. Only a handful of riders would get a poor driver off the system.
The rise-sharing giants balked at the prospect of conducting deep background checks on prospective drivers. They hated it so much that when Austin required it by law, both Lyft and Uber hauled ass out of the liberal Texas capitol. They returned the following year after the requirement was removed by conservative state legislators.
But who needs to do a deep background check into the stranger you’re about to entrust with your grandma? He’s got a Prius. He has an iPhone. How horrible could he be?
Not to scare the crap out of you, but it could be quite horrid.
In 2018, There Were Eight Sexual Assaults Reported in Ubers a Day
When Uber conducted its first study on safety, it found that in 2018 alone there were 3,045 incidents of sexual assault during trips within the U.S., nine people were murdered, and 58 were killed in crashes.
So, more than eight sexual assaults a day? What’s worse is half of those incidents are at the hands of the passengers. It was just as unsafe to ride in an Uber as it was to drive in one.
Before Uber went public last year, the company was valued at over $75 billion. Would it have killed them to install a front and back dashcam in every vehicle for the safety of both the passenger and the driver? A $99 investment?
But neither Uber nor Lyft wanted to invest in new drivers because they knew that most of them, once they got behind the wheel, realized the pay was so bad and the job was so unrewarding (See: Traffic, Cops, Drunks, Puke) that 96% of them quit before completing a year.
Which, of course, is Uber and Lyft’s fault.
Lyft is Just as Unlovable and Foolish as Uber
Lyft is less of a competitor and more of a mimic. Lyft could have easily stood out as being the ally for the driver. They had a head start with allowing tipping, something that Uber, weirdly told passengers was unnecessary.
But more importantly, Lyft could have held fares at a reasonable level instead of racing Uber to the bottom every time some genius theorized that lower fares would equal more trips and eventually more profits.
That day has yet to come.
Sadly, Lyft knew that as soon as Uber made a fare cut, it would follow suit, terrified of being known as being the ones who were 40 cents more expensive on a $30-trip.
Likewise, when Uber capped surge rates - really the only times the companies and drivers made any serious cash — Lyft followed suit.
The irony of driving a group of people to a concert that they paid three times the face value of tickets on StubHub, where they will pay 10 times the price of a can of beer at the bar and will dole out three times as much for food, but if the price of a safe ride home gets jacked up to a little more than what a cab would be — run to Twitter to bitch!
But I digress.
When most companies are #2 they figure out ways to innovate and stand out. Lyft knew that drivers and passengers often hit it off. They could have introduced a way to see if the 5-star drivers that you’d previously loved were in your proximity.
Why send a client an unknown driver who is four minutes away when you can offer them someone they liked — and maybe even tipped — who is just five minutes away?
I, for one, would happily have paid $1-$3 surcharge to be rematched with a favorite driver, especially if I knew that buck was going to that person.
But did these companies, who swore up and down that they were tech companies and not transportation companies ever do anything to use the data they had to improve these trips?
WHY WOULD THEY? THEY HATE PROFIT!
Likewise, instead of shutting down for months, why wouldn’t they just raise fares 30% to 50% to offset the benefits and expenses they would incur by making drivers employees? Their services would still be cheaper than cabs and passengers would get a better pool of drivers.
But that would mean Uber and Lyft would become more profitable. They seem to hate that.
Both companies regularly lose billions of dollars a year. And they have maintained that trend for years.
On one hand, they are obsessed with robot cars and the lowest fares imaginable.
On the other hand, it sure seemed like they were hellbent on going public, and once that happened, who cares about the product or debt. Cash out and bail.
Well, they went public.
And now they’re bailing out. Starting in California.
Let them.