Since its inception, Uber has a turbulent ride full of ebbs and flows. The organization with a vision to “replace car ownership” [1] has succeeded in building an extensive network of people connecting directly for transportation. What Uber hasn’t done successfully is to develop a pathway for self-sustainability. A failed business model doesn’t negate that their technology, network, and service is valuable. That’s why socializing Uber would be the best option for employees, drivers, investors, and customers.
Uber’s current trajectory is murky at best. The organization faces significant competition in pretty much every vertical it exists in or enters. The former CEO burned bridges with municipalities, entities that Uber needs to cooperate with for long term survival. Investors are losing faith [2], which makes acquiring new funding sources increasingly tricky. This puts increasing pressure on the company to financialize instead of innovating.
Here we can observe Uber’s death spiral in real-time. Their financial bind puts the organization in a no-win scenario. Uber understands that their biggest threat is not Lyft but automated vehicle technologies that are already being implemented [3]. If Uber is unable to monopolize or integrate itself into this new vertical quickly, it has no hope.
With all its flaws and challenges, we like Uber. More importantly, Uber’s predicament isn’t unique. It’s an advanced technology that provides real value but can never reach its full potential under a for-profit model. It’s time for the United States to embrace a more progressive economic model. One that recognizes that certain technologies have advantages that cannot be measured by capital alone. If we developed a new socialized corporate structure for Uber, society would benefit.
Uber’s initial bet was that they would dominate the market based on six key factors: a low-asset approach, cash to overwhelm competition, technological superiority, weakness of municipal governments, expanding product lines, and using existing success to transition to autonomous vehicle operation [4]. To date, they have failed to realize five of their six key advantages.
Companies like Uber rely on a concept called network advantage to monopolize markets. If you’re the first organization to collect a significant majority of users within your vertical, it’s going to be especially difficult for competitors to threaten you.
Uber missed that it takes little effort for a driver to participate in both their service and competitive services like Lyft. Uber has faced this same challenge in every international market it has expanded into. This theme also applies to all of the organization’s product line expansions, all of which have been met with nearly identical service competitors.
When we think of traditional Unicorn companies (a start-up that reaches a billion-dollar valuation), we traditionally assume the ability to scale growth rapidly. Everyone assumed Uber was a scalable model due to its low asset holdings, but in hindsight, we understand that not to be true.
Uber’s ability to grow is bound to the number of rides it can provide during a given point in time and space. To illustrate this point, consider taking an Uber in Manhattan during rush hour. Anyone familiar with the city will tell you that taking the subway or even walking is a much faster route. To put it another way, in the times and areas where people need Uber the most the network is performing at its worst for the company.
An aggressive approach to customer acquisition fueled Uber’s rise to dominance in the ride-share market. To expand, the company entered markets with no concern for how it might impact local municipalities public transit options. The results were measurable declines [5] in publicly funded mass transportation usage. As we might imagine, these actions have soured relationships with what should be key stakeholders in Uber’s future growth trajectory.
Beyond purely market-based challenges, Uber is working against our shared global effort to combat the climate crisis. While it has the potential to reduce car ownership in the long-term, the short-term ensures that we will have plenty of polluting vehicles on the road. As Uber encourages convenience, people use mass transit less. Uber drivers may also contribute to a delay in a publicly owned fully electric and automated transportation fleet because of convenience and habit for Uber consumers.
Uber has no real long-term future and the technology could be a vital component to an emergent leap in transportation here in the United States. Uber exists today as a transitory technology beyond the monolithic taxi structure but beneath a networked, automated, publicly owned electric vehicle fleet. The alternative option is for the company to continue along its current trajectory, bleeding cash, and struggling to find a future that makes sense.
So what would the process of socializing Uber look like? Our first steps would be to gain democratic consensus here in the United States. The progressive argument for socializing Uber is that because transportation is so vital to our existence, we should democratically choose to classify it as a right and socialize the advancement of it. It is the quickest pathway to completely renewable transportation infrastructure, creates stable employment for both drivers and corporate, and has the potential to reshape our access to each other.
Because we intend to facilitate the transition democratically, we have participation from the majority of stakeholders. Vital to the process is a clear and tangible trajectory for what we would do with the Uber network and technology after the acquisition and how we would do it.
We provide citizens with high-quality information explaining what the risks and benefits of the investment would be, supplied in a variety of formats to ensure people can access the data in a method that resonates with them. Ideally, the process bans special interest and lobbying advertisements in favor of publicized debates about the subject—real discussions, not major news network highlight reels.
Socializing an organization like Uber would require much of the existing operation to stay in place, so the majority of employees would remain in place upon the initial transition. One significant change would be replacing many of the Board of Directors. Opting instead for an elected, rotating citizen oversight committee to ensure the public’s voice in the growth planning. We ban political actors from participating in the board, codifying protections against the politicization of the investment for both present and future leaders.
Before the vote, some purchase agreement would have to be negotiated. The public’s choice to socialize the industry isn’t a commitment to give investors a high return on their investment. Ideally, a happy medium may be reached based on the existing and projected value of the organization. Uber struggles with finding a relevant pathway forward that makes it a sustainable business model, making it an attractive acquisition for the people of the United States.
Upon transfer, Uber could immediately implement policies to solve one of it’s most pressing issues—driver dissatisfaction [6]. At present, about 78% of total booking revenues are paid out to drivers [7]. That rate could immediately be increased to 85% depending on the long-term plan to utilize the technology. We could also reduce ride costs by cutting overhead costs such as marketing and advertising. By doing so, we create a more impactful draw to the publicly owned network through price points.
Capital earned over operational costs could be focused on research and development to advance the network technologies in many directions. In times of high surplus, the public could vote to designate some of the capital to alternative social projects. In essence, socializing Uber would make every citizen of the United States a stakeholder in the vertical of transportation.
Uber’s technology can also be integrated into automated electric vehicle transport systems in local and state governments. Through the power of the state, the public monopolizes transportation. Ensuring continuous investment, a high degree of transparency, and benefits that impact entire communities.
Tying this nationalized transportation network into our climate goals, we can grant immediate priority treatment to electric vehicle drivers. Critics may argue that the cost of electric vehicles is prohibitive to some people, and I accept that feedback as accurate. To address this, we could heavily incentivize electric car ownership for our low earners. Combined with the increased stability and pay from a socialized Uber model, we can empower drivers to raise their standard of living and be a part of the green transition.
Now we transition to the real purpose of socializing Uber. Our objective is to accelerate the process of codifying transportation as a new human right. Uber offers unique network and technological advantages that would help to accelerate transportation significantly into a highly advanced public sector.
Human rights have consistently evolved, the central difference between now and then is that we, as a collective, have the intelligence, education, and resources to be active participants in the transition.
Uber’s for-profit structure is failing, diminishing the reality of a market-based solution solving the problem. Public ownership recognizes the importance of transportation in our society and allows us to focus on advancement and equity instead of marketing and share price. It is tough for a person to maximize their potential in modern society without reliable transportation. The only requirement is for a moment of emergent consciousness, the recognition that we can evolve to be better today.
[1] Uber wants to be ‘the Amazon of transportation’ by Dara Kerr CNet https://www.cnet.com/news/uber-wants-to-be-the-amazon-of-transportation/
[2] UBER Stock Ticker Seeking Alpha https://seekingalpha.com/symbol/UBER
[3] Driverless, networked cars on Ann Arbor roads by 2021 by by Nicole Casal Moore Phys.org https://phys.org/news/2013-11-driverless-networked-cars-ann-arbor.html
[4] Can Uber Ever Be Profitable? by Len Sherman Forbes https://www.forbes.com/sites/lensherman/2019/06/02/can-uber-ever-be-profitable/#784cbb395785
[5] Lyft, Uber reduce bus use 12.7 percent in SF, says study by Adam Brinklow Curbed San Francisco https://sf.curbed.com/2019/1/23/18194612/lyft-uber-tnc-sfmta-san-francisco-public-transit-university-kentucky
[6] Ridester’s 2018 Independent Driver Earnings Survey by JC Ridester https://www.ridester.com/2018-survey/#satisfaction
[7] Can Uber Ever Be Profitable? by Len Sherman Forbes https://www.forbes.com/sites/lensherman/2019/06/02/can-uber-ever-be-profitable/#624ab3945785