Uber’s Less-Than-Uber Brand Image
In July 2011, a small car service start-up arrived in San Francisco. Originally founded as a way for customers to conveniently hail a black luxury car at only 1.5 times the cost of a normal taxi ride, the service soon morphed into a major disruptor for the transportation network industry in San Francisco, as well as other major cities around the world, including New York, Paris, and Beijing. The same year the startup launched its services, it changed its name from UberCab to Uber. New features such as UberX and UberPool were added to the original UberBlack, causing Uber’s price to drop and its popularity and consumer base to grow exponentially.

The ease, convenience, and affordability with which ride-sharing companies like Uber, or its close competitor Lyft, offer short-distance transportation is a major factor for its popularity among college students. Compared to other transportation sources, such as public transportation or private cab companies, rides from Uber are cheaper, more direct, and come with less wait time. With such attractive qualities, it’s no wonder that Uber has experienced such rapid and successful growth over the past half-decade: the company now operates in over 500 cities worldwide and gives over 40 million rides every month.

However, Uber’s growth did not come without resistance from older players in the transportation network industry. Because Uber’s services are less costly than those provided by traditional private taxi companies, the value of a taxi medallion — the “permit” issued by city governments to operate taxicabs, once valued between $250,000 to $350,000 — has decreased from lowered demand for taxi rides in favor of ride sharing services. This has predictably caused a great deal of backlash among taxi drivers. Since 2013, taxi drivers have launched protests and filed lawsuits against Uber drivers. The backlash even escalated to the point where taxi drivers physically attacked Uber drivers around the world for taking their consumers, in response to which The Simpsons aired a 2015 episode indirectly defending rideshare companies.

On the surface, Uber appears to be wildly successful. Exponential growth, billions of dollars in investment from firms such as Goldman Sachs and Bezos Expeditions, a $60 million plus valuation, and a naming as 2013 tech company of the year by USA Today all seem to indicate a company slated for unceasing growth and success. Beneath its gilt surface, however, lies a host of scandal, controversy, and deceit.

These issues seem to be concentrated at the levels of Uber’s organizational structure, and they take all forms, from methods to sabotage competing companies to ways to defraud Uber’s own employees. Just last month, for example, a lawsuit filed against Uber revealed that the company shortchanges its own drivers by showing and having passengers pay for more expensive routes while having drivers take shorter, cheaper routes, with Uber pocketing the difference between the passenger’s higher fare and the driver’s lower fare. Another way in which Uber cuts costs at the expense of its drivers is by classifying them as independent contractors, instead of full employees. This allows the company to avoid paying drivers employee benefits such as health coverage and paid holidays, which would amount to huge costs given the hundreds of thousands of drivers employed by Uber in the US alone.

If defrauding employees and not providing them with employee benefits weren’t enough, Uber is also facing an internal investigation into allegations of sexual harassment by several female engineers against management-level employees. The company is also facing a federal investigation by the US Department of Justice for using a software that helps drivers avoid transportation regulators in places where Uber had not been approved yet. Even the services Uber provides are not as perfect as they first appear: the company regularly engages in a practice called “surge pricing,” in which they dramatically increase fares when demand for rides is high. This put the company under extreme scrutiny back in 2014, when a hostage crisis in Sydney, Australia resulted in Uber rides that cost a minimum of $100. The same year, Uber’s elaborate plan to undermine Lyft by requesting and cancelling rides and recruiting Lyft drivers to Uber was exposed, creating further problems for the company and its image.

At the end of the day, Uber is almost like the school bully who acts like the polite, well-behaved student in front of the teacher, but then turns into a selfish and morally onerous brat when the teacher turns their back. Stealing drivers’ money, ignoring internal sexual harassment, and over-charging passengers during times of emergency are all indicative of the downward trend Uber’s brand name is coming to be associated with. Perhaps the most troubling aspect of the negative connotation associated with Uber’s brand is that with every new piece of bad press, people are less and less surprised to learn that the bad press is about Uber.

One can only speculate as to how Uber’s sinking brand and image in consumers’ eyes will affect its future success and viability. It’s value is already greater than 80% of the companies in the S&P 500, it’s service is generally reliable and incident-free, and it has such a stable foothold in virtually every major city in the world that it’s difficult to foresee a decline in Uber’s usage and revenues. Most importantly, Uber is still the cheapest and easiest service in the minds of its most important customers: college students and young adults. Despite the availability of alternative methods of transportation, such as Lyft and public transportation, it seems as if Uber is here to stay, despite its branding troubles.

  • Richard

    I agree. A wise businessman in the Caribbean named Sir Kyffin Simpson always said that the key to success is progression and humility, and clearly he’s done very well for himself as a self made man!

  • John Andrews

    The Airgain IPO launches this week, and they’re a one-brand company.

    Some investors don’t think it’s a good stock though:

    http://seekingalpha.com/article/3997291-risky-signals-antenna-maker-airgain-launches-ipo

  • Cincinnati World Cinema

    Well said, Joe, and worth rereading on a regular basis! Another advantage of small-to-midsize city living is pace and competition. Living in NYC, LA and SF entailed a hectic pace, hallmarked by capital S striving, as one realized there were a ton of others doing what I do. Spending so much time in one’s car in SoCal meant much less time for quality pursuits and pleasures. A smaller pond with relaxed pace allows one to savor life and special moments.


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