When Uber is forced to recognize its employees as employees, it's game over for their business model. That is the elephant in the corner of the room.
Sooner or later Uber will have to let this go to enhance their position that drivers are independent and then suddenly Uber won't be nearly as interesting to work with/for and the quality will plunge.
There are a lot of regions that like the concept of ride sharing, but don't like how an American silicon valley company is capturing wealth locally and sending it to Silicon Valley.
That's why I'm convinced we will soon see efforts to make co-op versions of Uber that copy its technology, but return 95%-99% of the money in each transaction back to the driver.
I live in China, and enjoy cheap rides with Uber. I'm pretty sure the money is flowing the other way, and investors are subsidising local drivers and riders.
For now. When the local market is won then the taps reverse and the money will flow the other way.
There is a degree of debt in Uber atm because of this. Many drivers are not accommodating the true operating costs of their vehicles. They are using vehicles they had at hand, not one they purchased for the business. When those cars start to need replacement, Uber suddenly isn't paying enough. There is a reason many jurisdictions place limits on cab age. City driving for money simply destroys vehicles.
1. Control over when they drive
2. Higher utilisation (which in extension should be a big driver for Uberpool)
3. Friendlier/less troublesome passengers
Some actually bought (nice) new cars (Mercedes/BMW) and explained me a bit more about the economics of buying a new car and how it made sense for them while driving for Uber. Many I spoke to share the car with another driver to get more rides done per day.
As such, I wouldn't assume that most drivers don't account for the total cost of ownership. To me it seems that many do.
(The bit about "not having to pay employer tax share for contractors" is a red herring; the sum of the employee and employer tax shares is the same, and economic incidence is -- per a well known result -- unaffected by who the tax authority assesses the taxes on.)
It would be a little less profitable (because of the parties' supply/demand curves, and hence why they oppose it) but it doesn't break the core business model.
Also, it seems the paperwork and entities involved would get messy. The "employees" still own the car and need to expense/depreciate it, right?
It doesn't have the same dynamic as the payroll tax, but it's misleading because the other point applies: the more benefits you buy for workers, the less (direct) cash you have to offer to entice them to do the work. Like with health insurance, a mandate for it would just mean Uber would lower time/mileage rates. In effect, this is the same as forcing drivers to use their cash earnings to buy unemployment insurance, which may be a worse use of the money.
>Also, it seems the paperwork and entities involved would get messy. The "employees" still own the car and need to expense/depreciate it, right?
Huh? They're already doing that as contractors. And Uber is now at the scale where (relatively) fixed paperwork costs aren't that big a deal.
Chicago taxicab companies are “misclassifying” their drivers as independent contractors and should consider them employees eligible for overtime and the state’s $8.25-an-hour minimum wage, a federal class-action lawsuit claimed Wednesday.
http://chicago.suntimes.com/politics/7/71/167962/class-actio...
But rather than being toast, it may be that the livery business is changed from a local monopoly, to a more market driven one. And then it will be interesting to see whether or not companies can deliver better service than the Taxis have over the last few years. I worry sometimes that rather than empowering drivers and enabling better service, it just changes who gets all the money. Sort of the same old, same old, just different names. And if that is the outcome, even with Uber being "successful" then I don't think it really will have dented the universe at all.
Aircraft have been close to self piloting for years as well (as far as my understanding goes), but you never hear anyone claim that pilots will be gone any time soon.
Google is covering tens of thousands of miles in autonomous mode every month [1], and Tesla is refining their algorithms and mapping data with every mile Tesla Model S owners drive (whether they've paid for Autopilot or not, the vehicle just needs to have the hardware).
Hockey stick and all that jazz.
That also said, Google has a lot of experience driving cars in daylight, in good weather, in a very limited area, and mostly on freeways. That is very different from turning those vehicles loose in Boston, at night, in a snowstorm, without any human even present. Five to eight years to purchase (or rent by the hour) an autonomous robo-taxi is absolute fantasy territory. Personally, I think 20 years is probably very optimistic. (Yes, there are a lot of advances being made but there's a huge gap between where we are and where we need to get to replace taxis.)
Regarding vehicles though, I don't agree. Yes, they won't work in the snow or inclement weather yet. But there are numerous places around the world where the weather is sufficiently stable that autonomous vehicles could operate the majority of the time. The value proposition is simply too high for anyone to throw their hands up and say, "Well, we can't do this." and move on to another project.
It's going to happen slowly (see: Tesla Autopilot slowly gaining more features with each point release), and then all of a sudden.
[1] http://theaviationist.com/2015/04/16/salty-dog-502-aar-omega...
I'm sure we're going to get there. The question is whether it's one decade or five to have no human present under a wide range of conditions.
I'll bet you a fine scotch that Uber isn't able to raise any additional rounds at their current or higher valuations.
http://www.bloomberg.com/news/articles/2016-01-09/uber-drops...
That strikes me as desperation, not a market leader.
In my opinion Uber's most realistic and promising direction is towards doubling down on delivery and logistics. E.g. Uber Eats (which is already amazing) and Uber Package delivery.
Uber wants to get so big, and make prices so low, that they decimate current competitors and discourage future ones.
It's a winner-take-all model; a land grab. The drivers are just along for the ride.
Low(er) pricing not only supports faster growth, but it gets enabled by the scale and efficiency of its network. That becomes a moat for Uber.
Raising pricing can come later, and with autonomous cars in the future. Getting the global network huge is only the precursor.