Uber is, or at least was, until recently, presented as a paragon of innovation. The company is, we have read many times, revolutionizing the transportation for hire industry through radical innovation.
I’ve had an instinctive distate for Uber from the start, failing to see how the various players in the ecosystem they built could make decent money. There is no doubt that Uber’s model ensured Uber was making money, but I had the feeling that the drivers certainly couldn’t, long term.
When their bully PR tactics emerged last year, my distate turned into frank dislike, but then what does that matter to anyone? The fact that I don’t use them doesn’t make an iota of difference. I did however get increasingly annoyed at them being used as an example of radical innovation. Let’s look into that for an instant:
Is the innovation in their app allowing you to hire a driver using the app on your phone? Sure that’s neat, but every large taxi company in the world matched that within months of Uber launching in their market. Could they have done it earlier? Sure. But the fact that it was so easily matched shows that that’s clearly not where the innovation lies.
Is it in the dynamic pricing? Beyond the fact that dynamic pricing is hardly a new thing in general (even if it hadn’t been applied to that industry until Uber did it), it doesn’t seem to be such a big selling point for users. Furthermore, at least according to one economist quoted in this fascinating article on Daily Finance, it’s ripe for abuse and will likely backfire as a consequence.
Uber is often presented as a great example of the “sharing economy”, is that where the innovation lies? Actually, Uber drivers are usually taxi drivers who moved to Uber, so there’s no “sharing” there, not more than there used to be. UberPop is a proper sharing platform, but it’s undermining the main Uber driver’s income, possibly undermining the whole business model. So how is that smart innovation? I’d say it rather gives sharing a bad name.
No, the innovation is in one simple, and as yet unadressed (at least until last week) regulatory issue: Uber has designed a model that allows it to completely avoid the labor and fiscal burden of employed drivers. Uber’s innovation, in a nutshell, is in fiscal evasion.
And the most amazing thing this about it is that everybody knows it: when the California Labor Commission last week decided to treat Uber drivers as employees every analyst and tech journalist on the planet said Uber was screwed.
Labor laws exist for a reason. They may seem frustrating to entrepreneurs (I should know) but they are, for the most part, individual rights earned after long labor battles. They protect workers, and they help finance the help needed by those who lose their jobs. Circumventing labor laws isn’t innovation, it’s just morally despicable.
So let’s forget about Uber as an innovator and focus on companies that truly are innovating, for the benefit of all rather than simply for the benefit of their own wallets.