Improving Uber's Profitability
And Q1 2019 got off to an equally discouraging start, with losses of $1.03 billion. Why has the company been unable to find quick fixes to its profitability problem? The most obvious quick fixes are for Uber to raise prices, shrink driver pay, or acquire competitors to consolidate market power. But none of these initiatives address the root causes of Uber’s flawed business model, and thus they cannot and will not be effective.
Furthermore, management’s failure to provide clear and concise goals will also lead to confusion among employees and a loss of commitment, not just to the task but to Uber as well. This event, hence, can also lead to the conclusion that Uber, as a team, is not working together towards improving the brand image and its brand equity; due to this, they end up making independent decisions that are not suitable for the whole company.
Our approach is novel and would provide an objective basis for adjudicating classification disputes, especially those that arise in the context of the on-demand economy. One of the most controversial issues in labor and employment law concerns how workers should be categorized in “on-demand” businesses that rely more on smartphone applications and internet connections than hierarchical supervision within traditional brickand-mortar workplaces (Cotter v. Lyft, 2015). For example, (former) drivers for ridesharing companies Uber and Lyft have brought lawsuits alleging that they were improperly classified as independent contractors and denied employment benefits. The companies have countered that they do not employ drivers but instead license access to a platform that matches those who need rides with nearby available drivers.
That almost guarantees that Uber can’t make money because the company and its competitors keep adding drivers, and it is ultimately is a race to the bottom. At some point Uber has to focus and show us that the business model does make sense because taxis have never been a very good business.
Editorial Bd., Defining ‘Employee’ in the Gig Economy, N.Y. TIMES (July 18, 2015), http://www.nytimes.com/2015/07/19/opinion/sunday/defining-employee-in-the-gigeconomy.html
Cotter v. Lyft, Inc., 60 F. Supp. 3d 1067, 1070 (N.D. Cal. 2015) (order denying summary judgment); O’Connor v. Uber Techs., Inc., 82 F. Supp. 3d 1133, 1135-38 (N.D. Cal. 2015)
Richard Epstein, Uber and Lyft in California: How to Use Employment Law to Wreck an Industry, FORBES (Mar. 16, 2015, 10:57 AM)
Myra H. Barron, Who’s an Independent Contractor? Who’s an Employee?, 14 LAB. LAW. 457, 457 (1999)