Thursday, 15 June 2017

The sharing economy: Uber, hubris and getting too big

The 'sharing economy' is very much about 'a willingness to skirt boundaries and ignore rules':
Futures Forum: Disruptive innovation everywhere...
Futures Forum: The sharing economy >>> Upstarts disrupting communities

There are problems with the model, however:
Futures Forum: Does Uber promote equality?
Futures Forum: Is Uber really part of the 'sharing economy'? >>> "The whole point of a genuine p2p and sharing economy is empowerment for those directly participating in it."

And there are real problems for the poster boy of the sharing economy:

Uber’s turmoil compounded by David Bonderman’s sexist quip
Ride hailing group faces uphill battle in rebooting corporate culture

At Uber, counting the costs of winner take all

David Bonderman's sexist comment to fellow Uber board member Arianna Huffington is indicative of problems with the group's corporate culture 


by: Leslie Hook and Hannah Kuchler in San Francisco

The departure from Uber‘s board of David Bonderman, after he made a sexist joke at a company meeting on Tuesday, is yet another pratfall for a company plagued by cultural issues and turmoil at the top that have led to chief executive Travis Kalanick taking a leave of absenceUber is trying to overhaul a corporate culture known for being aggressive and sexist, and had drafted in former US attorney-general Eric Holder to report on the ride-hailing company’s failings and recommend changes...

The incident underscores the uphill battle Uber faces as it seeks a cultural reboot following a series of crises ranging from allegations of sexual harassment, to a lawsuit over self-driving tech, to revelations about ‘Greyball’, software it used to mislead regulators.

It has been a dramatic fall from grace for a company that is still Silicon Valley’s most successful start-up, with a record-setting $68bn valuation. The question left unanswered, however, was whether enacting the Holder report’s recommendations will be enough to reboot “Uber 2.0”...

Many of the recommendations seem obvious, from goals and performance reviews to rules on alcohol consumption at work and a ban on sex with colleagues in a direct-report relationship. “The spoiled brats of Silicon Valley don’t know the basics,” said Vivek Wadhwa, a fellow at the Rock Center of Corporate Governance and author. “It is a revelation for Silicon Valley: ‘duh, you have to have HR people, you can’t sleep with each other . . . you have to be respectful’.”

The corporate culture under Mr Kalanick was marked by a willingness to skirt boundaries and ignore rules, an approach that helped fuel Uber’s rapid initial growth but has subsequently backfired. “This is a company where there has been no line that you wouldn’t cross if it got in the way of success,” said Hadi Partovi, an Uber investor and tech entrepreneur...

While many Silicon Valley start-ups experience growing pains, few have been quite as public as Uber’s...

Uber’s turmoil compounded by David Bonderman’s sexist quip

Forbes makes the point:

Uber's Problems: Has The CEO Just Trashed Entrepreneurship And The Sharing Economy?

JUN 14, 2017 

Shellie Karabell 

A demonstration by ride-hailing drivers at the Porte Maillot in Paris on December 15, 2016 to demand a better wage and to protest against the booking platforms, including Uber. (Photo credit: ALAIN JOCARD/AFP/Getty Images)

If you wanted to get around quickly and in relative comfort in Soviet Russia, you hitchhiked. Well, that is to say, you waved your hand at passing cars until one stopped, whereupon you negotiated destination and price and you climbed into the usually dilapidated car of a stranger and off you went. The absence of taxis on the customer side and the need for money on the supplier side meant that this was an efficient and widespread enterprise. It thrived despite being completely illegal, as it was largely overlooked by authorities.

Fast-forward three decades and you have Uber. Filling a need but breaking the rules, its industrial disruption meeting with widespread backlash on the part of striking taxi drivers, and customers unwilling to support a company they considered overvalued and underhanded. While the Uber app has been welcomed in some places such as London and Paris (despite aggressive strikes by French taxi drivers), Uber has faced fines and even arrests of senior management in some cities.

Uber’s Leadership In Question

Its contempt for rules and its juvenile corporate culture have put Uber’s leadership in question across the globe. The European Court of Justice in Luxembourg will decide this summer if Uber should be considered a technical platform that links independent drivers and random passengers, or a transportation service. In other words, is Uber a transport service or Internet service? Should the court decide Uber is a transportation service, the company will have to comply with the safety rules in European countries and comply with the same legislation as their taxi-driving rivals.

Indeed the timing for CEO Travis Kalanick to take a “time out” probably comes at a good time, given some of the public comments in Europe.

Dr. Giana Eckhardt, Professor of Marketing at Royal Holloway, University of London School of Management, did not mince words when we exchanged emails over the current state of Uber.

“The current ruckus at Uber puts the fact that most of the 'sharing economy' start ups are boy's clubs into the spotlight,” she wrote. “Uber has been unmasked as being as cutthroat, ruthless, and just as male-dominated as traditional companies such as investment banks."

She also believes that Uber’s debacle threatens to tar the rest of the sharing economy. “The illusion that sharing economy companies are out to create more sustainable efficiencies and build communities, rather than make as much profit as possible, is well and truly over,” she claims.

Benita Matofska, keynote speaker and global sharing economy expert based in Brighton, questions whether Uber really qualifies as part of the sharing economy.

“It's clear that Uber has provided an efficient on-demand service for people needing to access shared transport rather than own,” she told me in an email exchange for this blog. “ Hence its growth; this does not, however, mean that as a business it can act in an exploitative, unethical manner. Certainly, the company does not represent the true values of Sharing Economy companies who put people and planet at the heart of their businesses and are based on principles of community. There is never any excuse for sexist or exploitative behavior. Travis Kalanik's stepping down, I hope, is just the beginning of an overhaul of a company that does, for many, provide a useful service to efficiently access a shared resource.”

Eckhardt concurs: “Similar to many other scandals in many other industries, price and convenience tend to outweigh moral outrage when it comes to the consumption choices that consumers make.” But she believes there is a reputational cost to bad behavior. “Sharing economy companies will no longer be able to claim brand messages that emphasize environmental or community building themes, as there will be too much consumer skepticism,” she adds.

Money Over Morals?

And there’s another kind of ride-sharing becoming more popular in Europe, a trend started by BlaBlaCar and not unlike the ride-sharing you used to do at college when you needed a ride home for the holidays. BlaBlaCar drivers cannot make a profit under the terms of their agreement with the platform, and Eckhardt believes “they have developed their model by trying not to make Uber’s mistakes and holding onto the original ethos of the haring economy.” According to posters in the Paris Metro, AXA Insurance now offers insurance to some ride-sharing companies.

And while banned outright in countries such as Italy, Hungary and Denmark, Uber continues to thrive in London and Paris, and shows no sign of letting up despite the bad publicity. Uber is also a big hit in Moscow

On a more positive note, Uber has forced some much-needed changes in its taxi competitors. In Paris, the city’s taxi companies have finally set a fixed rate to and from the airports, and have introduced ride-sharing services.

And it has rephrased the question of what happens to work in an age of technological disruption? “There is now an overwhelming body of evidence to show that the Sharing Economy is causing the biggest shift in society since the Industrial Revolution and is the most significant business trend of all time,” claims Matofska. .

Labor Laws Need Updating

She believes current labor laws must be brought up to date to reflect the realities of the current job scene. “There is a need to develop a new classification of workers in this sector that enables and protects them, whilst acknowledging that 'gig working' comes with its own, specific characteristics, needs and indeed opportunities.” Matofska’ s organization, The People Who Share, has consulted workers, users and platforms from across the sector to put together a manifesto, protecting and enabling definition of this new classification of workers.

As to the future of Uber itself, Matofska says, ”Uber has an opportunity to create real value for people and the planet, but its future in Europe or anywhere else will be determined by whether it gets its own values in order. “

Follow me on Twitter @sckarabell1

Uber's Problems: Has The CEO Just Trashed Entrepreneurship And The Sharing Economy?

See also:
Futures Forum: The changing value of work
Futures Forum: The empty promises of 'Job creation' - and the real possibilities from 'entrepreneur-led revitalisation' and the 'return of a spirit of self-reliance'
Futures Forum: Ride-sharing with BlaBlaCar
Futures Forum: The gig economy is 'exciting' and has 'huge potential'... or maybe not...
Futures Forum: Uber and local government collaborating to give elderly rural residents a ride
Futures Forum: 'Independent workers' and the 'gig economy'

No comments: