Uber and its CEO increasingly appear more like entitled jerks than brave upstarts, but...

Last year, I booked 382 trips on Uber, according to a mail the company sent me in early 2017. That’s up substantially from the 270 rides I hailed in 2015. Since I spend so much time in the company’s cabs, it’s not surprising I’ve written a column about it in each of the previous three calendar years.

The first came after an Uber driver raped a 27-year-old passenger in Delhi in 2014, terminating the naïve idea that GPS tracking made the cars completely safe. Last year, I defended Uber’s surge pricing dynamic model, where price increases when demand is high, while criticising the Aam Aadmi Party’s government’s misguided odd-even scheme to regulate vehicular movement in Delhi. In 2015, during a strike by Mumbai’s black-and-yellow taxi drivers, I described how the degeneration of the city’s dependable cab system had driven me into the arms of app-based operators such as Uber.

The final section of that 2015 column also offered a warning and a prediction:

“Drivers are flocking to the service and hoovering up new cars, enticed by the excellent deals they’re being offered. For a guy in his early twenties with no great education or skill to earn between Rs 50,000 and Rs 90,000 a month, as many Uber drivers are doing, is a dream come true. What these men don’t understand is that the music will stop playing and the party will end. Some vaguely recognise that no company can keep subsidising cab rides forever. At some point, the need to turn a profit will trump the focus on customer acquisition, and both riders and drivers will be squeezed. But most drivers I’ve spoken to have no understanding of business plans in the Internet age, and genuinely believe the easy money will continue to roll in indefinitely. I suspect there will be a time not very far in the future when Uber drivers will be the ones on strike.”

Rough ride

Over the past year and dozens of conversations with Uber and Ola drivers, it was apparent the bitter truth that app-based cab aggregators were not going to offer them security and a comfortable income in the long term was gradually sinking in. Ever fewer drivers seemed happy with the deal they were getting.

Veterans were angry about falling incomes while those who came in at the tail end of the boom were barely able to feed and clothe their families while paying off car loans. As more partners joined every week, demand outside rush hour had fallen dramatically. Surge pricing, crucial to Uber drivers’ livelihoods everywhere, was curbed by regulation and public anger. The aggregators, meanwhile, had made benchmarks more stringent, forcing drivers to work extraordinarily long hours to gain incentive payments.

The gathering frustrations culminated in strikes by drivers in Delhi and Bengaluru last month, one in Chennai this week and another planned in Mumbai later this month.

Uber is also facing a crisis in its most important market, the United States. It began with a boycott campaign in January, after its CEO Travis Kalanick joined Donald Trump’s economic advisory council (he subsequently stepped down from the council). This was followed by a damning blog post by former Uber employee Susan Fowler, which exposed the misogyny at the heart of the company’s operations. After detailing how her complaints of harassment against her manager were ignored, Fowler wrote:

“When I joined Uber, the organization I was part of was over 25% women. By the time I was trying to transfer to another eng organization, this number had dropped down to less than 6%. Women were transferring out of the organization, and those who couldn’t transfer were quitting or preparing to quit. There were two major reasons for this: there was the organizational chaos, and there was also the sexism within the organization. When I asked our director at an org all-hands about what was being done about the dwindling numbers of women in the org compared to the rest of the company, his reply was, in a nutshell, that the women of Uber just needed to step up and be better engineers.”  

As if that wasn’t bad enough, a video emerged of Kalanick berating a veteran Uber driver who complained of falling rates. No sooner had Kalanick offered the requisite teary-eyed apology, than the New York Times published an explosive investigative story on Uber’s practice of “Greyballing” city officials targeting the company for violating city codes, wherein suspect officials were tagged and offered a fake version of the app peopled by ghost taxis, preventing them from taking a ride that could serve as evidence in a lawsuit.

I believe rules governing conventional taxis are outdated across the globe, and have some sympathy for Uber’s battle against bureaucracies, but while I support disruptive technology sweeping aside ossified systems, Uber and its CEO increasingly appear more like entitled jerks than brave upstarts.

Even as its valuation has soared to about $70 billion, making it the world’s most valuable startup, Uber’s prospects remain uncertain. It subsidises rides everywhere, especially in emerging nations like India, and lost an estimated $3 billion in 2016 as a consequence. In China, it threw in the towel following a bruising fight against the local leader DidiChuxing, accepting a merger that barely covered costs it had incurred trying to break into the world’s second-most lucrative market. The China defeat led to a stronger focus on India, but I’m not sure if our economy can sustain a profitable aggregator, leave alone two, at the scale required.

Road ahead

For the app-based service to keep growing, it must be dependable, affordable and profitable. To fulfil the first criterion, Uber needs plenty of cabs, which is why they have been on a partner-hiring spree despite falling driver quality. Ideally, the aggregator should have a reserve army of partners that can be tempted into service through surge rates during periods of high demand, but Indian car owners consider taxi driving too infra-dig to moonlight as Uber partners. Since its current drivers are full-time workers, lines of idle parked cars with yellow licence plates are now a common sight during off-peak hours in Indian metros.

Is there a sweet spot in pricing that will provide drivers a decent living, customers a reasonable ride, and the aggregator adequate profits? Perhaps there will be one five years down the line, presuming India continues to grow at a healthy clip. The problem is that the companies will burn through their cash a long time before that critical mass of potential customers emerges.

The first thing Uber and Ola need to do is to merge, creating a giant with unbeatable scale and resources to beggar any new entrant. That will stem the bleeding, and give them the potential to survive till profitability. But it’s going to be a perilous journey even for the merged entity. The Indian market is extremely price sensitive, and brand loyalty a chimera. No matter how dislikeable Kalanick and his company’s practices are, I’ll continue using Uber while he’s effectively paying me to do it. Whether I will pay him to do it is a different issue.

Given the paucity of options, I won’t rule out hailing app-based cabs even after rates get rational. But I’m pretty sure I won’t do it 382 times a year.