7th September 2021

Is Uber running out of road?

–The power of brand on VC-funded tech start-ups–

Rob Williams

Seven years ago, I was working on behalf of a well-known car manufacturer. The brand was concerned that it would soon become nothing more than a commodity, with its vehicles produced to hand over to the new kids on the block – a revolutionary mobility app that was gathering huge momentum in the US and had just arrived in the UK. 

It was called Uber (well, it was called UberCab).

When Uber was founded in 2009 and subsequently launched in 2010, the venture capitalist (VC) investment valued it at over $5 million, growing to $51 billion just five years later in 2015, with players like Jeff Bezos, Bill Gates and Jay-Z all wanting a slice of the action.

The reason for this car manufacturer’s concern was not unfounded. Uber’s proposition meant that it would completely own the customer relationship and regular interaction with the end-user, all happily handing over their valuable data on journeys – how, when and where they travelled. 

Uber was the app that a friend would invite you to down the pub, both receiving a free ‘ride’. A slick app with an even slicker user experience, you would simply select your destination to be shown your driver en route in real-time. On getting into the vehicle, it was clear that this wasn't a taxi... it was somebody's car. The radio was playing, they’d offer to charge your phone or even play your latest Spotify playlist while offering you a bottle of water. No meter, no rickety black cab that told you they didn’t take card payments just as you reached your destination. It was a comfortable journey, with a seamless experience that existed on both your phone and in the real world. You’d leave a rating as if you had purchased that journey from Amazon. And, to top it all off, the cost of the journey was less than a third of the price of other taxis – the modern user experience of ride-hailing was born.

Uber was the driving force behind a new take on democratising mobility. Hybrid/electric vehicles were shared and utilised at only the times they were required. Freeing up roads, reducing the number of vehicles that sat idle in driveways to be used only a fraction of the time. Utilising data, trends, and AI to understand hot spots, peak times and supply and demand.

Now back to that car manufacturer I mentioned earlier. This disruptor prompted the brand to pivot its entire business model - vehicle subscriptions, shared-ownership models, speeding up the roll-out of their electric-vehicle offerings, data as a service. A huge, fundamental shift in how it would exist in the new world. Gone were the days of the dodgy car salesmen only interacting with the customer the next time they wanted to part exchange for a new car. 

The shift was fundamental for that manufacturer's survival and longevity. But seven years on, the original catalyst for that shift feels a little... lacklustre. Uber hasn't dominated the mobility market or even turned a profit (yet). Shrouded in controversy and bad press, Uber’s ‘road to success’ has seen a few steep hill starts and stalls… which makes me wonder, is Uber starting to run out of road?

All hail the gig economy

One of Uber’s most profound effects on the new world was utilising a new way of working that was only just finding its feet – the gig economy. Drivers for Uber weren’t employed by the platform, they were a new type of freelance, being paid for a service on demand. They were free to set their own working hours, decide how many rides they wanted to offer, and to whom. The downside was that, as gig workers, they were entitled to none of the benefits or security of being an employee.

Enter the competition

With the emergence of new tech, a disrupted mobility market and a gig economy that presented huge opportunities, several competitors entered the same space, all contending for the attention and loyalty of consumers. This came as no surprise, investors and Uber would have foreseen this. Shortly after launch, there were several competitors on Apple’s app store and Google’s Play Store that offered a like-for-like service. So, what do you do when there is little differentiation between the service you offer and the service of the competition? Especially when drivers have no loyalty or affinity to your platform so will happily jump ship (or straddle both ships depending on which has the most earning potential).

Price wars

Hail a ride with Uber today, and you'll notice that the price of your journey isn't as enticing as it once was. Compare it to another hailing service, and you may find Uber is now more expensive. 

Uber has been artificially lowering the cost of rides for years, using VC investment, to build a customer base across the globe. Unfortunately, this can’t last forever (as Uber’s competitors will one day find out themselves). Without the VC-stream to artificially lower the cost of a ride, Uber is now at the point where the true cost of a ride must be reflected in the app if they ever want to become profitable. 

Uber put a lot of faith in self-driving capabilities to reduce the need for drivers at all, which is nowhere near the point of being ready in the short-mid-term future. In fact, Uber recently sold off its driverless car subsidiary to Amazon-backed start-up, Aurora Technologies, putting an end to its dream of an AI-driven workforce.

So, if you can’t compete on price for an identical service, what do you do? Will customers remain loyal?

Brand – the secret weapon

A brand strategy deeply rooted in authenticity is a C-suite’s secret weapon. 

A purpose, mission, and values to live and breathe, that are understood and reciprocated by your community, your consumers, and your stakeholders, that aid strategic decision-making across your entire business. Communicating direction, ambition and allowing you to build recognition and resonance in the minds of your audience. Building experiences around every interaction and touchpoint that are uniquely yours. And to build a tribe that demonstrate your values through an encompassing employer value proposition that empowers your own people to be the brand, that allows them to feel a part of something more than the sum of its parts.

The problem that Uber has is that it didn’t have this mindset from the get-go. Reports of a billionaire boys club start-up mentality, rife with toxicity and heavy-handed firing practices created a controversial brand from the outset. Couple that with ever-ongoing breaking news of issues with the treatment of drivers (and whether they should, in fact, be classed as employees), losing licences to operate in cities as well as internal turmoil, Uber hasn’t exactly made it easy for itself.

Drivers are leaving the platform in their droves due to mistreatment, unfair conditions and ever-reducing earning potential. A recent study by Stanford University found that 68% of drivers stop driving with the platform within six months of starting (source).

As more of Gen Z enter the workforce with earning potential and disposable income, with a focus on new-age mobility and reducing their impact on the planet, Uber would be the natural choice if it weren’t for a brand that doesn’t align with their principles. After all, new research suggests that company values are heavily prioritised by this new wave of consumers (source). This audience is looking at how a brand treats its people and aren’t afraid to voice opinions in the age of social media and cancel culture. With stiff competition ready to meet this audience’s needs, Uber needs to double down on re-building an inclusive and supportive culture. 

Building a stronger employer value proposition for everyone

In 2015, Andrew Levy, Uber’s new Global Careers Brand Lead, was tasked with leading a team dedicated to building an employer value proposition to repair and rebuild reputation, perception, and sentiment around working at Uber.

Levy aggregated data from offices all around the world to create an authentic and honest story about what it’s like to be an employee at the ride-hailing giant. The problem, however, was that not everyone was considered a part of Uber.

“I can’t speak to drivers because my vertical is just employees”, Levy was quoted as saying (source).

And herein lies the issue that Uber still needs to address. After years of back and forth, legal battles, protests, media coverage and mass exits, Uber is still only starting to accept that drivers are a key, fundamental part of its business model, recognising them as employees of their business in certain countries.

Regardless of whether Uber considers itself a tech platform that offers transport by matching passengers to drivers, a customer’s experience with Uber is still largely dependent on the driver you’re assigned. Consider then that driver holds the power to make or break an experience, whether they offer exemplary service or is an advocate of the Uber brand. Uber needs to empower these individuals to demonstrate its brand’s values, showcasing that its drivers are nurtured and feel that they are supported by their employer. A happy and high-calibre workforce is fundamental for creating a distinction in the minds of consumers and building positive experiences that are aligned with a user’s values. 

From March 2021, drivers in the UK will be recognised as ‘workers’ following a court ruling, with holiday benefits, pension and a guaranteed minimum wage. If this wasn’t law-enforced, it may have represented a monumental pivot for Uber. What follows in the coming years across the globe will be fundamental to Uber’s ability to win the race for talent, and ultimately users, as a values-led brand.

Conclusion

For start/scale-ups that may have recently acquired Series funding, it is critical to consider your brand from the outset, setting clear values that are rooted in authenticity and demonstrated by your leadership team. The ‘fail fast and break things’ mentality may still ring true to an extent but be careful that the things you break don’t remain broken for years to come.

Design and build a culture that is transparent, nurturing, and supportive so that your people become your ambassadors, who feel a part of a community and who won’t want to jump to the competition. By doing this from the very beginning, your brand and business can scale at pace while still retaining your true North Star to ensure that you remain true to who you are, that can attract and retain talent as well as prospective audiences who share your principles so that you don’t need to rebuild a damaged reputation down the line, impacting your bottom line.

Rob Williams is a Senior Brand Strategist at Design by Structure.

This article was first published in Brands Journal.

Published by: Fara Darvill in News

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