Read on Twitter
If it walks like a duck, swims like a duck and quacks like a duck: It's a duck.
This was the UK courts ruling on whether Uber's drivers were workers.
Uber's supreme court appeal against this starts today.
I wrote previously on why this matters: https://www.londonreconnections.com/2019/schrodingers-cab-firm-ubers-existential-crisis/
This was the UK courts ruling on whether Uber's drivers were workers.
Uber's supreme court appeal against this starts today.
I wrote previously on why this matters: https://www.londonreconnections.com/2019/schrodingers-cab-firm-ubers-existential-crisis/
Short version:
Refusing to give their drivers even basic perks was silicon valley bro culture at it's worst and a massive own goal.
It set them up for a showdown with English Employment law, which is VERY different from the US.
Because in it, the Duck Test matters.
Refusing to give their drivers even basic perks was silicon valley bro culture at it's worst and a massive own goal.
It set them up for a showdown with English Employment law, which is VERY different from the US.
Because in it, the Duck Test matters.
And in subjecting themselves to it, they now face not ONLY having to accept drivers are workers.
But ALSO may have accidentally proven that they are, in fact, a cab firm who employs them.
And that means they're liable for BILLIONS in retrospective VAT.
HMRC are watching...
But ALSO may have accidentally proven that they are, in fact, a cab firm who employs them.
And that means they're liable for BILLIONS in retrospective VAT.
HMRC are watching...
This is because right NOW, Uber insist that all drivers are self employed, so individually liable for VAT. And, handily for Uber, they all fall beneath the VAT threshold.
The same WON'T be true if Uber is indeed the cab firm, with workers.
Then Uber is liable for charging VAT.
The same WON'T be true if Uber is indeed the cab firm, with workers.
Then Uber is liable for charging VAT.
I should add before some tech bro starts complaining:
I'm not anti-rideshare. I think it has a place in a city's well-balanced transport network.
But it has to compete on a level playing field with others.
It's about fairness.
Disrupt the market, not the law.
I'm not anti-rideshare. I think it has a place in a city's well-balanced transport network.
But it has to compete on a level playing field with others.
It's about fairness.
Disrupt the market, not the law.
Okay, people keep asking about Uber's obsession with driver costs so adding a bit to the main thread.
So: first thing to remember is WHAT Uber actually is. It's not really tech innovation. It's just a nicely designed app.
So: first thing to remember is WHAT Uber actually is. It's not really tech innovation. It's just a nicely designed app.
I don't mean that to be negative, but it is. And it had first mover advantage in lots of markets. That's one reason why it did well.
The OTHER big reasons are:
1) They paid drivers well
2) They offered cheap journeys
BOTH things are critical to the success of the model.
The OTHER big reasons are:
1) They paid drivers well
2) They offered cheap journeys
BOTH things are critical to the success of the model.
But NEITHER is long term sustainable. Never has been.
Uber (like a lot of tech unicorns) talk about emulating Amazon and achieving 'economies of scale'. Because that sounds cool and techy.
But it DOESN'T work with cabs. For reasons I'll return to.
Uber (like a lot of tech unicorns) talk about emulating Amazon and achieving 'economies of scale'. Because that sounds cool and techy.
But it DOESN'T work with cabs. For reasons I'll return to.
For now, just accept it doesn't. Which is why Uber's EARLY approach in markets was always:
1) Launch big
2) Offer massively discounted rides
3) Pay drivers well so they migrate
4) Force most competitors out
5) Raise prices
It was just classic monopoly model with a pretty app.
1) Launch big
2) Offer massively discounted rides
3) Pay drivers well so they migrate
4) Force most competitors out
5) Raise prices
It was just classic monopoly model with a pretty app.
Now this more-or-less worked in most of its early markets. Enough to fuel hype, growth and investment.
But they were helped by the fact that most of that growth was in the US, with VERY weak transport regulators, vulnerable to public and private lobbying.
But they were helped by the fact that most of that growth was in the US, with VERY weak transport regulators, vulnerable to public and private lobbying.
Where they hit problems, was when they hit key big markets (NY, sorta), France and most particularly, LONDON. Where TfL (and the Mayor) are more resistant to that.
(No matter how many dinners they bought George Osborne)
(No matter how many dinners they bought George Osborne)
Of course they STILL didn't struggle hugely in London at first. Let's not pretend TfL were white knights. They weren't, UNTIL Uber ballooned the number of cars on the road.
Which fucked with the bus network. Which TfL DO care about.
So they slammed on the breaks.
Which fucked with the bus network. Which TfL DO care about.
So they slammed on the breaks.
I won't bore you with all of that. I've written about it before. On @lonrec and in the Guardian at the time.
Short version: London was a highwater mark. But also a point at which it became clear monopoly WASN'T working. Here or in the US
So they pivoted. https://www.londonreconnections.com/2017/understanding-uber-not-app/
Short version: London was a highwater mark. But also a point at which it became clear monopoly WASN'T working. Here or in the US
So they pivoted. https://www.londonreconnections.com/2017/understanding-uber-not-app/
Note: they'd started pivoting in some ways a bit before this but I'm trying to give you the grand sweeps here. It's a twitter thread. sue me. Or greyball me like I'm pretty certain Uber did back then 
.
.
The important thing to remember is that Uber only EVER really had first-mover advantage and deep pockets.
Moment regulators started catching up, and other rivals started launching and managing to hold ground, they'd lost the monopoly.
So Pivot.
Moment regulators started catching up, and other rivals started launching and managing to hold ground, they'd lost the monopoly.
So Pivot.
ANYWAY, that pivot has been to try and find other profitable (or pretend-profitable) adjacent markets/indirect rivals to disrupt. Hence Uber Eats.
But, in the taxi side, they still needed to find a path to profitability.
And that means lowering the cost of providing the service
But, in the taxi side, they still needed to find a path to profitability.
And that means lowering the cost of providing the service
Remember I said economies of scale are made up for Uber/taxis?
Well stop and think. It's pretty obvious why.
These are costs in a cab journey, to keep it overly simple:
1) The car
2) The fuel
3) The driver
4) The number of seats used
NONE OF THOSE SCALE WELL.
Well stop and think. It's pretty obvious why.
These are costs in a cab journey, to keep it overly simple:
1) The car
2) The fuel
3) The driver
4) The number of seats used
NONE OF THOSE SCALE WELL.
This is why Uber have been desperately trying to get you to split journeys with others (or trying to pretend they invent buses). They're trying to scale the number of paying fares per seat.
It's also why they're big on drivers owning their own cars, and on electric.
Both things (while positive in many ways) hide the equipment cost from the driver, making them think they're earning more than they truly are (because they're not accountants).
Both things (while positive in many ways) hide the equipment cost from the driver, making them think they're earning more than they truly are (because they're not accountants).
Which finally, FINALLY brings me to the big question:
"But what is Uber's path to profitability?"
Well it should hopefully be pretty obvious now. Because the one big, whopping, fixed cost in the damn car is...
...THE DRIVER.
"But what is Uber's path to profitability?"
Well it should hopefully be pretty obvious now. Because the one big, whopping, fixed cost in the damn car is...
...THE DRIVER.
This is why they fought/fight so hard on benefits (silicon valley bro idiocy aside). But MORE IMPORTANTLY it's why they are so UTTERLY OBSESSED with pouring money into driverless.
To be profitable, they need to remove the driver from the car.
To be profitable, they need to remove the driver from the car.
That's their big sell to investors, and their path to profitability.
They are hoping that they can get driverless cabs working, safe and regulated in ALL their key markets, so they can eliminate that one fixed cost and suddenly make their current model make sense again.
They are hoping that they can get driverless cabs working, safe and regulated in ALL their key markets, so they can eliminate that one fixed cost and suddenly make their current model make sense again.
And it's utter nonsense. Nonsense. It just isn't going to happen.
But hey, there's always venture capitalists out there who love the IDEA of a tech unicorn, and the belief that tech finds a way, more than reality.
Plus sunk cost fallacy is a bitch.
But hey, there's always venture capitalists out there who love the IDEA of a tech unicorn, and the belief that tech finds a way, more than reality.
Plus sunk cost fallacy is a bitch.
Again, I'm not trying to be negative here. I'm just a transport journo who happens to be a techie as well. Uber, from the beginning, just ticked all the right boxes for me which is why I've written so much about it and spent so much time looking at it.
And respect to them for making it this far, and for genuinely shaking up the market in some ways that needed shaking up.
But let's not pretend it's a tech innovator. It WANTS to be, now, but that was never Uber's original goal.
But let's not pretend it's a tech innovator. It WANTS to be, now, but that was never Uber's original goal.
It was (and is) a good app, with good financial backing, and good lawyers.
It used those things to try and build a monopoly, by exploiting regulatory loopholes, before they could be closed or lobbied into friendly legislation.
It's not a disruptor. Never has been. It's a troll.
It used those things to try and build a monopoly, by exploiting regulatory loopholes, before they could be closed or lobbied into friendly legislation.
It's not a disruptor. Never has been. It's a troll.
And eventually, sooner or later, as any good internet forumer of old knows:
You troll the fuck out of people long enough, at some point a mod is going to turn up and ban your arse.
You troll the fuck out of people long enough, at some point a mod is going to turn up and ban your arse.
Final reminder (sorry, long thread). My last piece on Uber in London is here.
Come for the Duck Test. Stay for the bit where Uber's legal defence is based on them claiming they're more like strippers than golf caddies.
I shit you not. https://www.londonreconnections.com/2019/schrodingers-cab-firm-ubers-existential-crisis/
Come for the Duck Test. Stay for the bit where Uber's legal defence is based on them claiming they're more like strippers than golf caddies.
I shit you not. https://www.londonreconnections.com/2019/schrodingers-cab-firm-ubers-existential-crisis/
Or, if you've had enough, don't forget you can buy me a coffee* here:
https://ko-fi.com/garius
*this is a lie. I will spend it on beer
https://ko-fi.com/garius
*this is a lie. I will spend it on beer
NO WAIT SUPER FINALLY.
I forgot to tell you all that the wikipedia page on the 'Duck Test' has the GREATEST USE OF MULTIMEDIA on the internet.
Image attached.
Enjoy.
/ENDS
I forgot to tell you all that the wikipedia page on the 'Duck Test' has the GREATEST USE OF MULTIMEDIA on the internet.
Image attached.
Enjoy.
/ENDS
