Friday, November 21, 2014

Why an Uber Decline May Be Good for the Emerging Collaborative Economy

Uber has been a poster child for the emerging sharing economy. While other collaborative economy startups like Airbnb and LendingClub have grown and garnered attention, they have yet to create the sort of impact within their verticals that Uber has in the livery business. In San Francisco, for example, Uber (with an assist from other ride-sharing startups) has already caused a 65% decline in taxicab trips and New York has seen a small but unheard of decline in the price of taxi medallions.

Given Uber's prominence in the early days of the collaborative economy, it may seem odd for me to suggest, but I believe a significant decline in Uber's business may be terrific for the long-term interests of the collective consumption movement. My reasoning is that the sharing economy is not simply about more collaborative products but more collaborative companies. Viewed through this lens, Uber simply has not earned its premiere status in this new business movement.

Uber's embarrassments have been many and frequent, such as:

All of these blunders occured before this week's embarrassing dustup over threats to dig up dirt against critical journalists and their families. Then, as if Uber's crap week needed icing on the clueless cake, the company's CEO, Travis Kalanick, compared his company's woes to those of the residents of Ferguson, MO.

Travis Kalanick (Photo Credit: Silicon Prairie News)
That Uber has a terrible corporate culture is in no doubt. Of course, what would you expect from a CEO that calls his company "Boob-er" for the way it helps him land dates. If the CEO at a traditional company said these sorts of things or presided over a fraction of Uber's PR stumbles, he or she would be shown the door immediately, but Kalanick seems to have nothing to fear, provided he keeps the billions rolling in for investors.  In fact, not only has the latest gaffe caused no apparent ruckus among investors about Kalanick's leadership, one investor--actor Ashton Kutcher--came to the executive team's defense, tweeting "What's so wrong about digging up dirt on shady journalist?"

If Uber's leaders and investors are unwilling to foster the sort of culture consumers want and expect, then perhaps it is time for consumer action. There is a small but growing trend among people deleting Uber from their smartphones. Comedian John Hodgman wrote a blog post saying "I just can't get into the car with those guys any more." Tech writer Nilofer Merchant is also deleting her Uber app. I have deleted mine, and you can too.

Yes, Uber is an astounding service, but is that really enough? Study after study validates consumers' growing desire for better companies--ones that act ethically, contribute to the community and treat both employees and customers better. This is made clear by a slew of research such as Edelman's Trust Barometer and Havas Meaningful Brands study.

We have the power to demand better leaders and companies. If we fail to act now--if we let our love of Uber's service blind us to its terrible and uncollaborative actions--that will only embolden and encourage VCs, startup leaders and others to accept aberrant leadership behaviors and build companies that respect nothing but profits. That is not the collaborative economy I want.

Some may suggest that an Uber failure would be a strike against the new sharing economy, but I believe the opposite is true. The collaborative economy is changing the world, but its progress will be hindered if we support companies that violate every tenet of the social era.

Cash may pay the bills, but trust is what drives the collaborative economy. Trust is the necessary ingredient to convert customers to new ways of consuming goods and to win the support of doubting regulators. Today, Uber's trust-killing antics are harming the entire sharing industry, raising suspicions about the kind of ethics and honesty that are driving crowd companies. At a time when Uber and other sharing economy companies should be winning hearts and minds, Uber's arrogance and mistakes are instead breeding suspicion at the Federal, state and local levels.

The best thing for the collective consumption movement would be for consumers to send a clear and unmistakable message to Uber and its peers. If enough of us act, we can shape the future of this emerging way of doing business. We can and should put the collaboration back into the collaborative economy and help Silicon Valley understand that we want more than better services; we want better companies.

Uber is not the only ride-sharing service around, and I urge you to consider exploring other options such as LyftSidecar and Curb. The next time you use a ride-sharing service, make sure it is one that has earned not just your business but your respect, as well.

(Added note: It seems advisable to point out that my opinions are my own. Moreover, let me state that I want ride sharing in general and Uber in specific to succeed. But on the trajectory it is going, I fear Uber will not only undermine its own success but harm other companies in the budding peer-to-peer economy. If deleting Uber now can bring about a change in its corporate culture and force Uber to be more collaborative, trustworthy and respectful, then I will gladly reinstall the app in the future and feel as if I have helped the company succeed in the long term.)


Unknown said...

I am torn on the Uber debate. I like the service, not everything - I think there are problems but overall I like it.

The behavor of the execs is dumb and inmature. It seems to be a frat culture and abhorent on many levels.

However - this because it run by inmature people, they take risks, they innovate. If investors install reponsible corporate execs, would it be such an edgy company prepared to innovate? Is nt the success of Uber based in part on its willingness to break rules and thumb its nose at the establishment? This is not to say I condone or forgive recent behavor but we must be careful as to how to respond. We want rule breakers but they often come with flaws.

Augie Ray said...

Terry, I don't get to disagree with you a lot, and I relish this rare opportunity! I object to the idea that being immature and being innovative are necessarily associated.

Mark Zuckerberg was innovative and made some mistakes, but the culture of Facebook isn't rife with douchbaggery. In fact, Zuckerberg early on realized he needed some maturity in his leadership group and brought in Sheryl Sandberg. (It's clear that Kalanick ought to do the same.)

Steve Jobs was an innovator, and while he was a difficult boss, Jobs wasn't immature and understood the value of a great corporate culture.

Jeff Bezos? Elon Musk? Tony Fadell? None of these people are dicks or created companies with toxic cultures that unnecessarily increase risk.

In fact, those in Silicon Valley agree innovators don't necessarily need to be dicks. In a poll conducted earlier this month by venture-capital data firm CB Insights, 77% of 48,000 newsletter subscribers said a "disrupter" does not have to be an “a-hole.”

Sorry, but I believe people and companies can be both innovative and mature. Something is amiss at Uber, and I believe customers can and should consider deleting the app until some changes are made and the culture is improved.

Unknown said...

Can't say I was that committed to my argument and you are right, entrepreneurs don't have to be a-holes. Is that a t-shirt slogan.

It is a shame that a good concept might be ruined by poor managemnet but it would not be the first time and if it is that good, the baton will be picked up. I am sold by your response, my Uber app is deleted.

It will make a good case study on the power of word of mouth to make and then break a company.