Uber is charging drivers to work
medium.com
medium.com
so many stories of not getting any rides when they get close to a promotional number of rides. You can't prove it but they are very suspicious that Uber does it
Poor Abi...
Moreover, they have much more opportunity to do it since a strip club and barber salon have a lot fewer rented spots (ones/tens vs hundreds/thousands) and there is more ways Uber can be sneaky about it. (Oops sorry it took us 10 minutes to find you a passenger)
OH there's also the fact that Uber has the ability to arbitrage. Since the drivers who payed in are more costly to Uber to send passengers to than the drivers who didn't. Unlike the other industries you mentioned where presumably everyone has to pay in.
Kalanick and the bros did a hell of a job trashing the company reputation.
https://www.theverge.com/2017/9/8/16273378/uber-fbi-investig...
There's also a pretty obvious mechanism for selection bias here regarding which type of situation we're going to hear about. Few people are going to write up a post saying "I got close to my bonus, and then I got more rides, and I got my bonus, and it was fine", whereas people who feel like they're getting screwed tend to be very vocal. So the existence of these stories tells us next to nothing.
In this scenario, dispatch would basically be a public utility, and drivers could trust the algorithm not to cheat. I.e. since Uber B and its competitors would be running any driver incentives, Uber A wouldn't even know about it. (And legally shall not know such things.)
I realize this is a half-baked pipe dream, but an interesting thought experiment.
But since Uber B has the brand recognition (through its UI), the question is if there will be a competitor. Nowadays, it seems that consumers converge more and more on a single brand for any service/product, which is probably due to the internet/social media.
This only seems true (at least over medium to longer times) for certain classes of product/service, namely those where network effects actually provide real value to consumers. Many products have tried to artificially integrate features that would initiate network affects (for example niche social networks for fitness trackers) but they end up making the product less usable because they're not part of the core value proposition consumers are looking for with that product.
This offer exploits loss aversion on the part of those drivers (once they take it up, they don't want to "lose" and have it not be worth it, so they might end up driving even if fares are low).
It's effectively the equivalent of a loyalty card availability in industries of all sorts. You pay $xxx for a card to get a y% reduction on transactions through a certain time period. If you engage in a high volume of transactions, it's +EV and you purchase it. If you don't then it's not +EV and so you don't purchase it. The industry operator profits in either case since their margins exceed the real value of your discount, and so it is win-win for them.
Well, it is and they do. No need for the "/s"
"Ride-sharing" has started to become a commodity and one of the only options left for large companies to out-compete small ones is to have a locked-in supply of drivers. This leads to lowering of standards for registration, temporary incentives, etc. that I think are ultimately bad for the drivers and consumers.
Why should a driver have to decide whether to primarily drive for Uber or Lyft if they aren't an employee of either? If there is no downside to a driver registering for another company, it will allow competition to focus on quality of service, tech, etc. rather than simply having the biggest supply of drivers.
Maybe a driver has a shitty car, but can still register on every app except for the super-upscale one. Maybe a driver hasn't had a background check run, so he can only register for the cheaper sketchy app that most people worried about safety don't use. Doesn't that make more sense than this ridiculous scramble for a "network effect" capable of justifying Uber's valuation?
First off, "reward high performers" and "punish low performers" are equivalent as long as both systems are explained fairly up-front.
But more relevant here is that a percentage change is much more defensible. The worst case scenario is still getting money per mile, but less of it. That's very different from starting off $115 in the hole.
> It's effectively the equivalent of a loyalty card availability in industries of all sorts.
With a loyalty card, you're in full control of how much you purchase through it. It's not dependent on the luck of the draw over a course of a particular week.
It's the combination of a flat fee and the random (uber-controlled, too) nature that makes this deal throw up all sorts of red flags.
> After I tweeted out the pay-to-play screenshot (Fig 1), Uber wrote to me to explain that the screenshot refers to a study in Houston that is part of a research collaboration between Uber and two MIT economists. They added that, “Further, drivers have to opt-in to the offer and there is a disclaimer explaining that if they opt-in they will be part of an academic research project.”
In some ways, the questions that are raised are more about the underlying research ethics (did the authors get IRB review? One presumes, but it's not stated either way in tfa), than about Uber's actual behavior. Or perhaps the question is whether Uber should be participating -- or what conditions Uber is imposing on the study to ensure that the drivers that accept are not going to be harmed substantially.
And they're taking advantage of loss aversion too, not just desire for higher income.
I never missed an event when I paid the ticket.
That said, it's a bit of a gamble. If the driver is available but there are no rides they should perhaps issue a refund.
Every driver will automatically make 133% their standard take because they are Gauranteed to get strong surge fares all night. So this is like paying extra to make the sun come up in the morning- that shit was going to happen anyway.
The UX is a little misleading but I could see this being an effort by Uber to pre-commit drivers as a means of reducing surge pricing.
What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees.
You should work for any sort of delivery or courier service. This 'worst possible light' is daily business for companies like Papa Johns and others that claim their drivers are merely 'contractors.'
This is also quite illegal - you can not pay to work. It's literal extortion - you have to pay us in order to receive this amount of wage. No, the courts frown upon this.
You do know the offer is optional right? If a driver doesn't want to pay $115 for the 33% rate increase then they don't have to. Did you read that part? Also, many drivers could benefit from this especially if they drive full time in popular areas.
You do know that such an offer is illegal, right? It is literally "If you pay us, we'll pay you more later on." It's the actual beginning of a Ponzi Scheme.
Which law does it violate?
> It's the actual beginning of a Ponzi Scheme.
Your argument is of the form "Romans build roads, therefore people who build roads are Romans."
Ponzi schemes don't have actual customers, which inherently leaves the people at the bottom of the pyramid holding the bag.
Uber pays drivers from fares. There is no pyramid.
Ponzi Schemes don't have customers? There have been plenty of "multi-level marketing' businesses selling things like perfumes, knives, even candle wax, and have been ruled as Ponzi/Pyramid Schemes. It's the exact same behavior - pay us to make money.
So do a million other startups. That doesn't mean the drivers don't get their money.
> Ponzi Schemes don't have customers?
The majority of the scam's revenue comes from payments from workers rather than sales to customers.
> It's the exact same behavior - pay us to make money.
Pyramid schemes have pyramids.
Almost every business has a pyramid structure - that's literally basic business management for all but the most n00b of startups. It's the behavior that defines a Pyramid Scheme and this behavior matches it almost 100% to the definition.
In fact there's a nice database of plenty of other companies acting EXACTLY like this and subsequently getting their butts handed to them in court - http://www.mlmlegal.com/legal-cases/Illinois_v_Unimax.php is one of my favorite cases to read because it very clearly demonstrates what Uber is doing here is illegal - just because you aren't required to do it or buy into it doesn't mean it isn't illegal in the first place.
So do Egyptian Pyramids but that isn't the relevant structure.
Do you really not understand how a multi-level marketing scam works? You pay to sign up, then you get paid for signing people up. The obvious problem is that this is recursive and exponential, which quickly exhausts the available supply of suckers so that the people at the bottom lose money because there is no one for them to sign up.
That dynamic is not at play here. There is no recursion. You don't pay to sign up and then get paid for signing people up, you pay to sign up and then get paid for driving people around. The people who get driven around don't have to sign people up.
There are lots of professions where you have to pay to work. Many trades require the tradesman to buy their own tools. A proprietor who wants to work in a booth at a fair has to pay for the booth. That doesn't make them Ponzi schemes.
There are dozens more MLM scams than the one you describe, and in fact they're more prolific.
"That dynamic is not at play here. There is no recursion."
'Give us money and we'll give you a chance at making more money.' That's quite recursive, and in some states, it's in fact a form of illegal gambling.
"There are lots of professions where you have to pay to work"
No, you don't. If you want to use ANOTHER BUSINESS and their facilities to do your work, then yes. Cosmetologists can work right out of their own home as long as they have the relevant license. They don't have to rent a spot at a barber shop. Strippers don't have to work at a strip club - they can advertise on Craigslist and do private parties instead.
"Many trades require the tradesman to buy their own tools."
Some states require that if you require a specific tool or item for an employee or user of your services for the purposes of conducting business, you the employer or service provider are required to provide it. Here in CA, where Uber is HQ'd, we have that codified in law.
"You pay to sign up, then you get paid for signing people up" is basically the definition of a multi-level marketing scam.
> 'Give us money and we'll give you a chance at making more money.'
You have just described investing, lending at a variable interest rate, all forms of commodity and currency speculation, universities, craft fairs, conference booths, commercial real estate, manufacturers paying retailers for shelf space, salesmen buying leads, the entire marketing industry, etc. etc.
> That's quite recursive, and in some states, it's in fact a form of illegal gambling.
The fact that you can do something more than once in a row doesn't make it recursive. The problem with multi-level marketing is that A has to sign up B in order to make money, but that requires B to sign up C and so on recursively, which necessarily means there is someone at the end who pays but doesn't get paid.
> If you want to use ANOTHER BUSINESS and their facilities to do your work, then yes.
A landlord who hires a plumber to fix a burst pipe will claim they're a contractor. So will Uber. So will the perpetrators of the MLM scam. You can't use something to distinguish cases when it's the same in all of them.
> Cosmetologists can work right out of their own home as long as they have the relevant license. They don't have to rent a spot at a barber shop.
Their house doesn't come from the house fairy. The fact that they also live in it doesn't mean they didn't pay for it. Moreover, finding one person who got a house from the house fairy wouldn't get rid of all the other people paying money for space.
> Strippers don't have to work at a strip club - they can advertise on Craigslist and do private parties instead.
Drivers don't have to pay to get extra money, they can just take the normal rate.
> Some states require that if you require a specific tool or item for an employee or user of your services for the purposes of conducting business, you the employer or service provider are required to provide it. Here in CA, where Uber is HQ'd, we have that codified in law.
Even in that case, you will still have people working on commission who buy items themselves which aren't "required" but increase their effectiveness and therefore their commissions.
Also, my employer requires me to wear pants at work, but they have never provided any. Are they in violation of California law?
"Also, my employer requires me to wear pants at work, but they have never provided any. Are they in violation of California law?"
Apparently you don't read the law - the answer is yes they do if there is a specific company-identifying uniform that must be worn (like in the case of fast food restaurants) and they are not legally allowed to charge you for it - they must provide it free of charge.
Go read the law. Everything you've asked me is answered in it.
Its a scam because their is a finite pool of potential idiots and when you run out the bottom of your pyramid collapses taking subsequent layers with it eventually.
If a multi level marketing company actually provides enough wealth for the bottom level to function then it isn't a ponzi scheme.
I don't see this as a bright-line case.
In the taxi (and Uber) case, I believe most of those are contractor relationships, not employee relationships.
As far as medallions go, that is just the result of government regulation. Plenty of industries wind up being populated with nothing more than a bunch of rent seekers. The government sets up an artificial scarcity where there is none to control negative externalities. The fix is easy: require the license holder to be the one that actually uses it. No leasing to others. As far as I know, no one has done that for commercial licensing. Ironically for private licenses (fishing license, etc.) this is already the case.
That happens with Uber consistently. The cab companies hate them with a white hot fire and there are plenty of media outlets who are happy to take a story from a PR flack, especially when it generates page views.
When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something.
> What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees.
But in that case why would anyone take the deal?
If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk.
> When people complain about surge pricing and then complain about things that mitigate surge pricing, that is pretty good evidence that they just want to complain about something.
That's an ad-hominem. If you're going to claim people are complaining just to complain then you need to support your case that this sleazy pay-to-play scheme isn't a sleazy pay-to-play scheme.
Just because Uber is trying to fix something bad (surge pricing) doesn't mean their solution (this ridiculous scheme) isn't also bad.
> > What makes this potentially unethical (in my mind) is where the price is set. If it's set at a point where Uber's models predict the average benefit to a driver is $0 then this is essentially shifting the risk to their employees.
> But in that case why would anyone take the deal?
The first problem is that drivers have no way to know that until they've lost money on the deal. Uber has a team of accountants to figure out their expected returns while the average driver does not.
Also, as others have pointed out, there's a conflict of interest for Uber because they control who gets called up, so they can avoid sending rides to drivers who are about to cross the threshold for a payout from this scheme.
> If they did that then the drivers would pay $115 to make back $116 (or $110) and then never do it again because it's not worth the risk.
It's not that simple, though. Since Uber controls who gets rides, they can make sure that some portion of drivers come out ahead using this scheme. When other drivers claim they lost money or just broke even, the "winning" drivers can chime in that the scheme worked great for them. The end result is confusion and uncertainty, so that nobody outside of Uber itself really knows one way or the other how it will turn out.
With as many drivers as Uber has, they can probably fake it for quite a while.
Its an explanation of their motives.
> If you're going to claim people are complaining just to complain then you need to support your case that this sleazy pay-to-play scheme isn't a sleazy pay-to-play scheme.
It has an obvious benefit in increasing available supply. Once a driver has paid the fee they have 35% more incentive to provide service.
> Just because Uber is trying to fix something bad (surge pricing) doesn't mean their solution (this ridiculous scheme) isn't also bad.
Neither of them is actually bad.
Bad is the inability to get a ride during high demand because nobody is doing either of those things.
> The first problem is that drivers have no way to know that until they've lost money on the deal.
That only works the first time. After that the driver has their own experience to draw on.
> Since Uber controls who gets rides, they can make sure that some portion of drivers come out ahead using this scheme.
In which case only those drivers will sign up next time and the pool of drivers willing to sign up shrinks every time.
> When other drivers claim they lost money or just broke even, the "winning" drivers can chime in that the scheme worked great for them.
Nobody cares what other people say when their own personal experience says something else.
It's easy to trick anyone once, but then they won't trust you anymore. People not trusting you forevermore is an expensive price to pay for a one time payout.
And people say lottery players are bad at math!
Because lottery tickets are entertainment. People with crappy jobs get to imagine telling off their stupid boss and moving to their own private island. The fact that it never happens doesn't mean people won't pay $1 to imagine it. Or for the feeling they get when the numbers are being read and the first two or three actually match once in a while.
There is nothing equivalently exciting about temporarily getting paid 35% more at work.
I suppose "lingots" don't really have a monetary value, but imagine this tactic done in a game where the currency is worth some amount of actual money.
please drink a verification can
I have noticed that drivers of car sharing schemes (where you pay per minute) are a bit eratic at times though. I’m not sure if that’s because they are inexperienced drivers, or just the mentality of “I need to rush, this is costing me money!”.
edit: Googling turned up that this seems to be a thing in at least San Francisco, London, Dublin, Wellington (NZ), Sydney, and a few smaller UK cities.
I always thought, if you are rich don't bother with a car & chauffeur just get a taxi everywhere, and get their faster.
That aside, if Uber is a profit maximizing entity why would Uber offer this promotion if it isn't worth it for them? I'd be very very sceptical on Uber's attitude towards consumers .. uhmm I mean drivers/"employees".
"As long as your weekly earnings exceed $349 you'll come out ahead!"
I believe you're incorrect or trying to mislead. That sentence implies that there's a strong possibility people can come out "not ahead" or, specifically, lose potential income on the arrangement.
My problem is that Uber has a bunch of venture capital that it can use to entice and entrap vulnerable populations into an exploitative relationship.
It's only "pure capitalism" if one has a shockingly naive view of economics that ignores all of the preconditions that are required for a free market. For example, information symmetry, which is laughably not true given that Uber controls the dispatching with algorithms that are opaque to drivers.
As time approaches infinity, yes, I believe the market will sort out many issues with Uber. In the meantime, I think they have the potential to grind up and spit out many people.
But does lyft have the capacity to take on huge number of uber drivers? Given the gap in revenue numbers it looks unlikely.
If so, then why are they choosing to work for Uber instead of doing whatever they'd be doing if Uber wasn't around? Are you saying that they're stupid or being tricked?
If not, then isn't the world a better place for those people with Uber as an option?
These people would have worked as taxi driver before, often with better compensation and job security.
But as soon as one person offers rates that are cheaper, all of them have to, or they won't get anything.
Uber drives competition between the employees, and as result, they all get less.
Simple economics. And also the reason that only unions and government regulation can ensure acceptable work conditions
Taxi drivers have earn like 30% less relative to before Uber, but there are 10 times more drivers that now earn about the same as the taxi drivers. That's a massive net growth of opportunities to earn money.
Although I think I am on board with this being a really interesting experiment, even if it might become a morbid fascination it is definitely interesting.
All internal metrics from what I've heard are rapidly increasing with no signs of stopping. The recent negative PR doesn't really affect their core business and their operations are so well oiled at this point that even not having a CEO for a while really had no major impact.
Look, I get it. Uber is easy to rag on and they've bought themselves no favors through their past actions. But let's look at this objectively. There are many parts of their business that are unprecedented and to pretend we know how this is going to play out for sure is impossibly naive. For example, they even have a 20% stake in China's Didi and that's a huge piece of the puzzle internationally.
Ride sharing is here to stay, and the market will only grow. That much is clear. What Uber’s position in a mature market looks like is what’s unclear.
1. http://www.latimes.com/business/technology/la-fi-tn-lyft-alp...
Consider, maybe, that the worker has a migraine and feels like it'd be unsafe for them to be driving.
https://www.youtube.com/watch?v=JGwZcR0q6VE
Uber is an old scan. - By Richard D Wolff
We legislated and regulated the old Taxi Cab industry when there was no insurance, bad employees, criminal activities, badly maintained vehicles. And someone can move in and laugh at the laws, and offer it for cheaper (Uber). Its only time until they die, or are regulated themselves.
Sounds like an interesting idea given all the outrage with price surges.
And what would the researchers be studying?
The resemblance doesn't seem to be a coincidence.