Issue of the week: Disasters pile up at Uber
“Uber was already off to a bad start in 2017, but the year is getting worse by the day for the $69 billion ridehailing company,” said Biz Carson in BusinessInsider.com. After losing more than 200,000 users in January to the # Delete Uber movement, which formed in response to allegations that the company tried to profit from a travel ban protest, Uber “has been pummeled by a seemingly never-ending barrage of bad news.” This week, Uber briefly halted its self-driving car tests after a crash in Arizona, and it had to address a report about its executives going to an escort-karaoke bar in Seoul, even as it struggled to contain the damage from recent allegations of widespread sexual harassment. Then there’s the lawsuit from Google accusing Uber of stealing self-driving car technology; revelations that Uber used secret technology to evade local regulators; and a viral video of CEO Travis Kalanick insulting a driver. “If business schools need a new case study for a company in a PR disaster, Uber’s last month is as perfect an example as can be found.”
Uber’s pain is Lyft’s gain, said Katy Steinmetz in www.Time.com. Uber’s ride-hailing rival has grabbed about 5 percent of Uber’s market share since the #DeleteUber campaign launched, and has been aggressively positioning itself as a feel-good alternative. Lyft also scored positive attention with a $1 million donation to the American Civil Liberties Union after President Trump issued his first travel ban, and this week it unveiled a new feature that lets users donate part of their fare to charity. But with just 20 percent of the market to Uber’s nearly 80 percent, “Lyft is still a pretty distant No. 2.” Uber’s mess is a big distraction for the company, but overall, “it hasn’t bothered riders and it hasn’t hurt business,” said Erin Griffith in Fortune.com. Case in point: Uber just reported its best week ever for sales in the U.S. Lyft is currently trying to recruit new investors, but it remains to be seen whether “Check out our competitor’s dumpster fire!” is a convincing sales pitch.
Is this is the sound of the tech bubble popping? asked Adrienne LaFrance in TheAtlantic.com. Uber is by far the most valuable of the 187 “unicorn” startups valued at $1 billion or more, despite losing at least $1.2 billion in the first half of 2016. But it’s unlikely an Uber collapse “would set off too terrible of a chain reaction in Silicon Valley.” The tech industry’s funding sources are more diversified than they were in the original dot-com bubble, and the definition of what makes a “technology company” is also much broader. Odds are, investors will see Uber’s flaws as an isolated case of bad corporate governance, not evidence that they shouldn’t be investing in startups. The era of cheap, investor-subsidized Uber rides may be over, however, said Alison Griswold and Akshat Rathi in Qz.com. At its present pace, Uber will “exhaust its current financing in a little more than two years.” The company can hardly afford to alienate drivers further by cutting into their take, so it will probably raise fares instead. “If nothing else, don’t expect rides to ever get any cheaper.”