Internal and External Problems of Uber

Uber Technologies Inc. is a global taxi technology company headquartered in the United States, California, operating in 633 cities worldwide. It develops markets and operates the car transportation and food delivery mobile apps. Uber drivers use their own cars although drivers can rent a car to drive with Uber worldwide.

Lack of senior execs (Internal Problem)

Compounding Uber’s internal problems include a lack of senior leadership. Kalanick is out, leaving Uber without Dara Khosrowshahi. His right-hand man Emil Michael, the SVP of business, left just before Kalanick. The company’s also without a Chief Operating Officer for a long time. In some thoughts, that’s an opportunity. It gives Uber’s new CEO Dara Khosrowshahi a chance to bring in their own people and make hires that can take the company in a new direction, but it needs to have to happen fast. Uber isn’t alone in the ridesharing space, Ola and many others are partly competing.

Waymo suit (External Problem)

The immediate external problem for Uber is a pending legal battle with Waymo, Google’s self-driving car subsidiary. One of Wayne's top engineers resigned Waymo for Uber and downloaded 9GB of Waymo technical data to take to Uber before he left. Uber at first claimed the suit had no merit described it as a “baseless attempt to slow down a competitor” but it’s since had to fire, the engineer at the heart of the case, and it appears to be bunkering down for a long court case. A recent report also suggested that Kalanick himself was aware that Levandowski had downloaded Waymo data before leaving, which would put a significant hole in Uber’s legal defense. Uber’s new management is going to have to re-evaluate Uber’s current legal strategy for the lawsuit. While it’s difficult to see the Travis-cult-era Uber accepting guilt and losing to Waymo, Uber’s new leadership might decide that paying a fine or accepting penalty is a worthwhile price to pay for a clean break with the past.

Profitability (Internal Problem)

The much greater issue of Uber over the next five years is that it’s yet to make money. Uber’s dirty secret is that almost 50% of the cost of every ride you take is subsidized by Uber itself, using some of the giant stockpiles of cash it has from venture capital investors. Uber’s strategy is that it’s worth spending money now in order to expand massively and get to the size where no other company will be able to compete. If it can do that, it will have a monopoly over ridesharing and ultimately, transportation around the world. That’s the end game for Uber, and that’s the storyline that underpins the stratospheric $60 billion valuations. But right now, the numbers just don’t really add up Uber. If it raises prices to the point where UberX is profitable on its own, it opens itself up to competition from Left, taxi companies, and any local ridesharing services that want to start up as new. The hope further down the road is that it can lower costs by doing away with drivers altogether in future.

Uber’s investment in driverless cars is aimed at a very specific vision of the future, where a fleet of autonomous Uber cars roam cities continuously, offering cheap rides 24/7 with no need for Uber to split the fare with drivers. It’s a future that could absolutely happen, but it’s a little far away for Uber before keep losing money hand over fist. In the meantime, Uber is trying alternative ways to make more money out of its platform, but nothing’s really working. UberEats and UberPool are two ways of trying to “optimize” the driver base, to make sure there’s never any time when Uber drivers are sitting idly waiting for work.

Going broke (Internal Problem)

Uber’s biggest enemy here is time. No one has much doubt that driverless cars are coming, and that autonomous vehicle will present a big opportunity for Uber in the future. The problem is surviving long enough to see it become a reality is hard. Uber lost $2.8 billion-plus in 2016, excluding its failed venture in China. The year before, it was about $2 billion. Most estimates put Uber’s cash stack at around $7 billion, which means Uber has about three years of burn left in their pocket. 5. Uber drivers organizing (External problem)

The next problem is its relations with drivers. Uber has always had a bad relationship with its drivers, who are legal “contractors” rather than employees. But the restrictions Uber does put on its drivers, combined with fares that always seem to be decreasing, have tempted Uber drivers to start organizing and fighting back. In April, Uber spent $100 million plus to settle a lawsuit with drivers in California and Massachusetts, who took the money in return for agreeing to remain independent contractors. You can expect similar lawsuits to keep springing up unless Uber takes measures to keep the workforce happy, while also keeping the drivers officially off the books as employees.

Workplace culture (Internal Problem)

In early 2017, Uber was described by insiders as having a "stupid culture". Uber's organizational culture was described as one in which employees are lauded for bringing unfinished and unreliable solutions to market in order for Uber to appear to be an innovator and winner. In a corporate culture likened to the novels TV series A Game of Thrones, in which rivals for the throne vie for power, the company encourages aggression and "backstabbing" of co-workers, in which peers undermine each other and their direct superiors to climb the corporate ladder. Few human resource managers in the software industry see Uber as a potential black mark on the resumes of ex-Uber employees, with one industry manager saying, in reference to “If you did well in that environment upholding those values, I probably don’t want to work with you.” Some Silicon Valley computer programmers labeled Uber as "poisonous" and encouraged any friends who work for the company to quit.

Drivers using the app while driving (External Problem)

Concerns also arose regarding the manner in which the Uber app notifies drivers about new requests for pick-up and how the drivers must respond to such requests. When one customer makes a request, drivers are notified on an official Uber mobile app and are provided the customer's location. To accept the request, the driver has approximately 15 seconds to tap the phone to accept the request.

An Uber driver reported that a driver can be temporarily suspended for ignoring these requests. Deborah Hersman of the National Transportation Safety Board criticized the 15-second system, saying that it presents a distraction to drivers, as drivers are financially motivated to respond to fares while driving. In response, Uber has stated that the app "was designed with safety in mind," and that drivers are not required to physically look at the device to accept a fare.