stopuber

In what’s becoming a recurring theme for Uber, the on-demand transportation company is facing yet another major backlash from drivers. Add that to the fights it’s encountering around the globe with taxi industries and regulators.

Online driver forums like UberPeople.net are blowing up this week with complaints that Uber is forcing drivers in New York that previously signed up for its premium Uber Black and Uber SUV services, to receive (and potentially accept) requests from riders on its economy UberX and UberXL tiers.

The initiative began as an opt-in program, with Uber Black and SUV drivers given the option to designate their vehicles – typically luxury vehicles like Towncars, Mercedes, and Cadillacs – as being available to pick up riders set to expect little more than a Prius or Camry. Many drivers chose to participate in the program and, at least according to Uber, made more money per shift as a result. But now that choice is going away.

In an email sent to Uber Black and Uber SUV drivers in New York earlier this week, the company writes:

More than 1,000 partners have been using this option regularly and it has been a success: drivers who opt-in to receive uberX/XL trip requests make on average 35-50% more per hour after commission than those who do not, equivalent to $1,600 more per month or up to $20,000 per year in net revenue. While there are additional costs associated with these extra trips, the results are clear: drivers who receive more trip requests make more money, even after accounting for any additional expenses.

But then the kicker:

Based on these results, starting now, all BLACK and SUV partners will automatically receive uberX / uberXL requests.

For a moment, let’s take Uber at its word- – something that isn’t easy given its track record. If drivers are in fact making more under this multi-tiered program, then what’s the issue?

According to the numerous drivers venting across these online forums, UberX trips tend to be shorter and thus the per-ride fairs are lower. Further, the rates, minimum fares, and Uber commissions are different for each of these tiers. Even if the result is more trips per hour, and thus more total income, this change looks to many like a bait and switch that forces drivers to do significantly more work for the same (or marginally more) pay.

There’s also the problem that UberX and Uber XL attract a different customer demographic than do Uber Black and Uber SUV. So for a some who chose to drive for Uber expecting a high-end experience, this new program often means something far different.

Another issue arises when drivers contemplate simply rejecting these economy tier ride requests. Uber drivers are, after, all independent contractors – a point the company has gone to great lengths to make clear. On the surface, it seems they should be free to accept or reject any ride they choose. According to forum comments, however, Uber drivers are required to maintain a minimum 80 percent ride acceptance rate to remain in the company’s good graces – the best performers exceed 97 percent, the company tells its drivers. Ignore too many inbound ride requests when you are the closest vehicle and the result could be some combination of reprimand/probation, lost bonus income, or, in extreme cases, deactivation of the driver’s account.

Drivers whose livelihoods are solely tied to Uber probably should be concerned about where the platform is ultimately going. Free market zealot and Uber CEO Travis Kalanick has proven he has no real loyalty to them. He has long defended surge pricing by saying it was getting more cars on the road and more drivers on the platform, and that eventually, he hoped all that supply would then force prices down across the platform. And at this past year’s Code Conference he practically salivated at the notion of a network of self-driving cars that could take out the “cost” of human drivers. You know the old adage about transporting the scorpion across the river… Kalanick has made his loyalties clear and they aren’t to drivers or riders, but the free market.

But here’s where Kalanick has to be careful: The above requirements begin to tread very dangerously on an employer-employee relationship, something Uber desperately wants to avoid if it intends on sticking drivers with the costs of paying their own fuel, insurance, maintenance, and vehicle payments. The full list of driver KPIs, according to several forum members who have run afoul of Uber standards, is: Overall Rating, Surge Rating, Non-Surge Rating, Acceptance Rate, Cancellation Rate, Fare reviews per trip, Total 1 star Trips, and Total 5 star Trips. Fall short on one or more of these performance benchmarks and your driver status could be in jeopardy.

So back to this Uber Black vs UberX designation fiasco. Uber has stated that its mission is to undercut the cost of car ownership. In pursuit of this goal, it seems like the company is increasingly emphasizing its economy tier services at the expense of its one-time baller image. Take the launch of the Uber Pool ridesharing feature as just one example of this fact. It’s a trend that may benefit riders but has caught the ire of drivers, as demonstrated by recent protests by drivers in LA, Seattle, and other markets seeking better wages and working conditions, and the decision of Southern California drivers to seek the support of the Teamsters union.

So where does this all leave Uber? The online protests by Uber Black and Uber SUV drivers in New York remain relatively isolated and are unlikely to have any impact on the company’s bottom line or on vehicle availability in the near term. But ignoring these concerns could ignite a slow burn of dire consequences. Uber is now valued at nearly $20 billion and I, along with others, have defended the case laid out by the company and its investors for why its long-term potential far exceeds that sum. But one thing that could quickly derail this high-growth narrative is for the company to lose the confidence of its drivers.

Unlike Facebook — a company that would regularly piss off users with impunity — there are other options to Uber, in particular one very heavily funded competitor in Lyft. Uber is threatened enough by Lyft that it’s employed dirty tactics in the market to crush it, meanwhile Lyft continues to slowly and steadily ingratiate itself to drivers by being the anti-Uber. Uber has a monster lead but this market isn’t a surefire monopoly, and it’s still early days.

There is a zero sum game of drivers out there: If there weren’t — Uber would employ tactics like these and the city of San Francisco wouldn’t be struggling to get new cab drivers. Uber’s need to maintain both strict background check and minimum vehicle quality standards – something it hasn’t always done effectively – mean this driver pool is more limited than some would think. Also, if the company gains a reputation for treating its drivers poorly, that already slim talent pool will shrink even further. Finally, while passengers are generally pleased to see the company’s rates decline, plenty of people are willing to boycott the service in the face of unfair business practices.

With billions in the bank and a global brand that is quickly becoming a verb in and of itself, the company certainly has more resources at its disposal and room for patience in these disputes than do its drivers. Either way, it’s beyond sad to see one of the innovative companies of our generation caught up in such an ugly and intensifying dispute with its so-called “partners.”

***

Read the full email sent to Uber drivers below:

For the past two months, BLACK and SUV partners have had the option to accept uberX and uberXL trip requests by going online in their ‘+’ vehicle. More than 1,000 partners have been using this option regularly and it has been a success: drivers who opt-in to receive uberX/XL trip requests make on average 35-50% more per hour after commission than those who do not, equivalent to $1,600 more per month or up to $20,000 per year in net revenue.

While there are additional costs associated with these extra trips, the results are clear: drivers who receive more trip requests make more money, even after accounting for any additional expenses.

Based on these results, starting now, all BLACK and SUV partners will automatically receive uberX / uberXL requests.

If you extrapolate the results we saw over the summer, partners earned the equivalent of an additional $20,000 annually!

Why?

This summer, partners who accepted X and XL trips were earning 35-50% more per hour after all deductions. In fact, these drivers are the highest per-hour earners on the Uber system.

uberX is now our fastest growing product, and we want all our partners to benefit from that growth.

Will I still get BLACK and SUV requests?

Yes – the majority of your trips will still be BLACK and SUV. As always, the driver closest to the request will get the trip.

What about my ‘+’ Vehicle?

You no longer need to log in with your ‘+’ vehicle to receive uberX / uberXL requests. For the time being, you will still see both vehicles listed.

I might make more money, but I’ll spend more on gas if I take uberX trips.

Doing more trips will increase gas and other costs slightly for some partners, but our test this summer showed that higher earnings more than offset this cost.

What is the commission rate on uberX/XL?

Commission on uberX fares is only 20%, which is lower than the 25% on BLACK and 28% on SUV, so you’re keeping more from each uberX trip! uberXL commission is the same as SUV.

QUESTIONS?

As always, Uber’s goal is to ensure strong driver earnings and offer the best value to riders.

If you have any questions, please feel free to reach out to us directly at XXXXXXXXXX.

Thanks,

Uber NYC

Copyright © 2014 Uber Technologies, All rights reserved.

You are receiving this email because you are an Uber partner.

Our mailing address is:

Uber Technologies

301 Vermont St

San Francisco, CA 94103

  1. Uber is a technology platform that is evolving the way the world moves. By seamlessly connecting riders to drivers through our apps, we make cities more accessible, opening up more possibilities for riders and more business for drivers. From our founding in 2009 to our launches in over 200 cities today, Uber's rapidly expanding global presence continues to bring people and their cities closer.

    1. Shervin Pishevar
      Past Investor
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      Past Investor