The revenge of the status quo is brutish. “If you attack the establishment long enough and hard enough, they will make you a member of it,” humorist Art Buchwald once observed. Those words never seemed truer than at the “Uber Turns Five” celebration at its San Francisco digs Wednesday. In the disruption economy, five years can carry a ride-service giant from disruptor to establishment.
Uber CEO Travis Kalanick certainly has matured. Last year, the startup went on a “charm offensive” in an attempt to quell stories about Uber’s testosterone culture. That didn’t go swimmingly. A male exec told a New York editor that Uber should hire top opposition researchers to dig up dirt on media critics — in particular PandoDaily Editor Sarah Lacy, to retaliate against her protest of the company’s “sexism and misogyny.” It was a nasty ride.
Still, as Kalanick likes to say, Uber is “passionate about learning” from its mistakes. This year, Kalanick brought his mother. He teared up when he talked about her.
And who introduced him? Not some oozing-money venture-capital jockey but a military wife who became an Uber “driver partner” this year. Theresa Ferguson got all choked up as she talked about how being a driver has allowed her to not only spend more time with her three kids but also volunteer one day at her son’s school. “Uber has allowed me to be my own boss,” she proclaimed in a touching “I am woman” moment.
Uber has raised close to $6 billion, and its valuation exceeds $50 billion. Nonetheless, Kalanick and company like to talk about the ride-service corporation as a “public service.” Money? Don’t be crass. Uber is all about helping people and “allowing people to serve their cities.”
Uber expects to add another million to its stable of 1 million driver partners like Ferguson. Artists, consultants, and stay-at-home moms use it to supplement family income, pay off student loans, etc.
Uber is good for cities, Kalanick argued. When consumers simply can push a button to get a ride, they don’t need to drive their cars downtown. With fewer cars, cities don’t need to build garages. There’s no need for all those ugly parking meters. Uber means cities don’t have to spend capital to lay down rails or buy buses. Be it noted, Kalanick offered — and who in the room would care to argue? — “public transportation alone isn’t enough.”
Uber and competitor Lyft claim they promote public safety by reducing drunken driving; why get behind the wheel when celebrants can push a button? When workers use its commuter service, Kalanick added, that reduces tailpipe emissions.
In short, Uber has the perfect business model. It doesn’t have to buy cars, and it makes money letting people drive their own rides. If consumers don’t like the setup, they can drive or take cabs. In San Francisco, it seems, competition has spurred cabbies to step up their game.
After five years, Uber has numbers on its side — and that spells lobbying prowess. It wasn’t that long ago that taxi companies and limousine services were trying to use their clout to put ride-service startups out of business. They had a good argument, too. They wanted to level the playing field and subject Uber and Lyft drivers to insurance standards akin to those for professional drivers.
Last year, California Assemblywoman Susan Bonilla carried a bill toward that end. It sailed through the Assembly in a 71-0 vote. Republicans, who are supposed to oppose niggling regulations, did not oppose it. Then Uber, Lyft and other ride-service startups organized their drivers and consumers. An avalanche of email outrage prompted the Legislature to tame the Bonilla bill.
This year, ride services are a giant that can crush critics. Last week, the Assembly postponed a bill by Assemblyman Adrin Nazarian to require random drug testing for freelance drivers. Uber, Lyft, and Sidecar opposed the measure on the grounds that their background checks protect consumers and that making drivers show up for drug tests undercuts their business model, which relies on flexibility. Uber spokeswoman Eva Behrend told the Los Angeles Times that the bill really was about “protecting entrenched Sacramento special interests from competition.” The measure tanked before it came to a floor vote. Sacramento lawmakers now fear the wrath of the ride-service world.
When Uber and like-minded businesses started, they popped up under the radar of regulators. Next, they built up a worker and consumer base that served to help them fight old-school regulation that gets in the way of individual choice and initiative. Now, Kalanick said, Uber can come into a new city and tell the mayor that ride services will reduce traffic congestion, smog, and drunken driving. Right now, Uber is a low-cost transportation utopia.
What happens when Uber moves to driverless cars, as it surely will? The disruption drivers in turn will be disrupted. The ride-service giant will lose its league of freelance drivers/lobbyists and its pretext of existing mainly as a “public service” for freelance go-getters. Quoth Kalanick, “Our driver partners are the heart and soul of this company.” By then, Uber will be part of the entrenched establishment — where an organ can be replaced by a machine and soul is optional.
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