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An American Superhero or Simply an Uber Villain?
August 11, 2016|e-commerceLife

An American Superhero or Simply an Uber Villain?

An American Superhero or Simply an Uber Villain?

Uber, the American transit liberation service formed in 2009 by Travis Kalanick and Garrett Camp, is widely considered to be the darling of many investment portfolios on Sandhill Road. Uber is viewed as a raging success of Silicon Valley disruption, something all entrepreneurs should aspire to.


I personally have my doubts. There are many things regarding the company’s business model, safety and most importantly, for those who have invested in the company, its longevity, and the sustainability looks to me to be destined to go the way of the dodo, or in this case the more apt analogy, maybe Napster.


Do I have anything good to say, I hear you ask?


Of course, as a businessman, I understand that any innovation will be destructive and often cause losses of jobs, and even change industry practices. Again, this is akin to the Napster analogy I mentioned earlier which will become blatantly clear in this piece later on.


I recently came back from Budapest where other taxi drivers unceremoniously kicked Uber out of the city because of revolt. What I thought would be useful would be to go through both examples, in London and New York, as to the procedures and qualifications a taxi driver has to obtain before they can operate, as well as a financial impact.


Let’s begin in my own capital city of London. To date, there are 24,000 Black cabs (that is, the term Black relates to the colour of the carriage), each one of them having disabled access, something that others may not appreciate as much as I do, nevertheless the fact. In order to operate a black cab, drivers are forced to do “the knowledge” – an arduous system, that has potential drivers driving around London on mopeds, memorising over 400 different routes used by customers. Incredibly, this process is so engulfing it can take on average 3 to 4 years to finish. Once completed, drivers have a thorough police background-check and only when they have passed this test are able to operate as a driver. There are many other levels of qualifications, that drivers are held to, for example, if the driver is complained about to the central office more than once, he or she can lose their license to operate. Cab drivers are held to a higher standard than the average driver. This process is equivalent to an undergraduate degree and medical research supports that this actually expands the driver’s visual awareness and geographic centres of the brain.


As far as I can tell, Uber allows anybody to use his or her own vehicle, once an apparently flimsy background check is done. The driver is simply given the software to his/her phone and then they can become a driver. Just stop for one second to think? We are actively encouraging strangers, who are unqualified and not vetted, to drive us around. What does this mean for safety? Heaven forbid that an Uber driver would commit a felony, or even worse a physical attack on a passenger (after death, the most horrifying would be a sexual assault). Currently, there are little to no responsibilities taken by the company for such matters.


Ladies and gentlemen, quite simply every time you enter a car with an Uber driver, you are rolling the dice and taking chances because you have no protection or recourse. Is your son or daughter not worth more protection? Is this not why we buy insurance and pay our taxes?


In New York, there is a more clear reflection of the financial impact, for those who do not know the Yellow Cab synonymous with the Manhattan skyline are only allowed to operate with a Medallion. These Medallions are restricted and the number and quality of drivers are controlled whilst also maintaining a viable business for those who could afford them.


Medallion Stock Price


As we can see from the staggering chart about the Medallion valuation, there has been a disastrous impact on the valuation of yellow cab medallions as our friends have expanded from city to city with impunity. Can this be justified from a company that takes little or no responsibility for its own actions and in fact, tries innovative ways to distance itself from its drivers on a daily basis?


I could go on about this, but I won’t talk about the ridiculously pathetic Uber accessibility program that is borderline false advertising, at least in my current city of San Francisco.


There is one last thing that interests me the most.


Uber recently announced a Chinese merger with Didi, a merger that leaves a $35 billion company with the current shareholders getting around a 20% stake in the new entity.


It was reported by Bloomberg that Uber is burning through around $1 billion dollars a year to maintain its current position. So I have one question to Travis and Garrett, why are you sacrificing the biggest population on the planet if your business model is working? Especially when two months ago all parties ruled out any merger. Is Uber running out of Capital or do we truly believe that they are going to spend time expanding into other markets? Really? It sounds to me a lot like a CEO who gets pushed out of their job, but then the press release reads, “They want to spend more time with their children”.


My personal view is that the clock is ticking, and I imagine the next step will be to push for an IPO (initial public offering). This is where the business is floated on the Stock Exchange and hence, would create massive fortunes for Travis and Garrett. This would be a completely logical step if only they weren’t risking people’s lives every day to make their fortune.


I am the most avid capitalist and totally believe in innovation. Since the day I was born, it has enabled me to free the shackles of my physical disability to live a normal life. However, sometimes innovation can be destined for destruction, not in the sense that they make things better, but instead, they just change the rules or in this case simply ignore them. Now we have come full circle and I will end this note with a vote of caution. When Sean Parker founded Napster, it revolutionised the music sharing capabilities of the world, but also single-handedly nearly destroyed the music industry itself. Mr. Parker was at one time the most litigated man on the planet and ended up making no money from Napster. I am not about to cry for Sean, as he did very well with his influence over Facebook, but I wonder whether Travis and Garrett had a similar dilemma? They have created a monster that they can no longer control and are being ousted by city after city across the globe.


Their only hope is that people and investors believe in their model long enough for them to reach the nirvana of the New York Stock Exchange.


As always, please feel free to leave your comments. Some people will agree with me, others will not, I look forward to hearing from you all.


Kieran Prior



Kieran Prior

My blog “Trading Places” is all about perspective. People who read it may not and often will not be in agreement. And that does not matter, as everybody is entitled to their own perspective. What does matter, however, is that the right questions are asked.

4 coments

  • Mark
    August 13, 2016 at 6:51 am

    Spot on

  • August 21, 2016 at 8:01 pm

    I really like what you guys tend to be up too. This
    sort of clever work and coverage! Keep up the very good works guys I’ve included you guys
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  • August 25, 2016 at 7:51 pm

    This is a topic which is close to my heart…

    Best wishes! Where are your contact details though?

  • Comments are closed.