DISRUPTIVE INNOVATION/THE GIG ECONOMY: THE UBER BUSINESS MODEL

Disruptive Innovation: Uber & Gig Economy Business Model

Section B/Topic 3 – Charu Arya, Ervis Bida, Joe Colombo, Christian DeFelice, Jessica Flaherty, Kyle Rusignuolo, Rajat Sinha, Tom Williams

 

The Business Model

Wikipedia – Disruptive Innovation 

What Is? – What is the gig economy 

US News – What Is A Gig Economy?

Investopedia – Gig Economy

Reuters – EXCLUSIVE U.S. Labor Secretary supports classifying gig workers as employees

 

Wikipedia – Sharing Economy 

  • The Sharing Economy is a socio-economic system reliant on the sharing of resources.
    • Reach clients through Peer-to-Peer (P2P) transactions where individuals interact directly to produce and receive goods and services.
    • Reliant on information technology and digital platforms to distribute and share products.

 

Wikipedia – Disruptive Innovation 

  • Disruptive Innovation is an idea/product that establishes a new market or enters an existing market, which then overtakes the incumbent products before it. It does so by providing new benefits which its predecessors do not and cannot provide.  
    • Example – The Ford Model T, introduced in 1908, made horse drawn carriages as a means of primary transportation obsolete.
      • More recently, on-demand ride sharing services, such as Uber and Lyft, have utilized technology to shift the driver market away from taxi companies and limo services.

 

 US News – What Is A Gig Economy?

Investopedia – Gig Economy

Reuters – EXCLUSIVE U.S. Labor Secretary supports classifying gig workers as employees

 

  • Gig Economy is a labor market compiled with employees operating on short-term contacts or freelance work. 
    • Workers do not have permanent positions. 
    • Positions can range, such as drivers, journalists, educators. 
    • “Gig” taken from performance arts. Concerts, comedians, speaker appearances known as gigs. 
    • 2017 Reuter’s study reflected that 34% of the US workforce were gig employees. 
    • Technology has rapidly expanded the gig workplace, made possible by companies such as Uber, Care.com, Upwork, TaskRabbit.

 

How It Works: The Gig Envisioned:

Wired – The Gig Economy: The Force That Could Save the American Worker?

  • Following the 2008 financial crisis, the United States workforce was reeling and unemployment numbers reached levels not seen in the county since the Great Depression. But the emergence of a Gig Economy represented new opportunities for displaced workers and their families.
  • For a long period of US history, professional success was characterized by one’s ability to remain at a position for an extended period of time, all while improving their own positional rank in order to accumulate wealth. To constantly change jobs and work off limited contracts was frowned upon and deemed irresponsible.
  • Freelance and contract work is now much more welcomed by both workers and corporations.
    • Organizations hire gig workers for limited roles to help solve specific issues. Also allows a business to save money by not providing a full-time and limited wasted time with no training or guidance provided.
    • Allows workers to develop a strong work-life balance. 

 Forbes – A Disruptive Cab Ride to Riches: The Uber Payoff 

  • Technology presents opportunities for a gig economy, allowing workers a place to interact and present their abilities.

 

  • Founded in 2009, Uber, a “mobility as a service” provider, took advantage of the idea of a gig economy and emerging freelance workforce by establishing a unique business model.
    • Despite initially beginning as just a rideshare platform, Uber did not own any cabs nor did the company hire cab drivers. Uber would allow anyone, after an extensive background check, to sign up to become a driver and operate on their own schedule. Uber’s app then conveniently connected the driver and their vehicle with a user needing a ride. 

 

  • Before Uber, the primary driving service market was cornered by limousine and taxi services, both of which relied heavily on schedules and cash payments, who at times only operated in very limited city markets.
    • Uber’s accessibility with their application, along with the ability to hire drivers at any location across the country, has allowed them to operate in over 900 metropolitan areas across the globe. 
  • Has since expanded services beyond ride sharing, such as food delivery, package delivery, and expansions into electric bikes and motorized scooters through a partnership with Lime.
  • Uber allows people to apply for a “flexible earning opportunity” as gig workers. 
    • Great independence for workers. Workers are left alone and have their own timetables to complete tasks.

 

The Critique –

The Trouble with the Gig

 NY Times – A Driver’s Suicide Reveals the Dark Side of the Gig Economy

  • Bhairavi Desai, a middle-aged woman without a driver’s license delivered emotional testimony in front of New York City’s Taxi & Limousine Commission about the mounting existential difficulties in the taxi industry.
  • The disruption Uber brought to the Taxi industry resulted in many casualties among the taxi companies and its workforce. Annual bookings of full-time yellow-taxi drivers in New York, working during the day when fares are typically highest, fell from $88,000 a year to just over $69,000.
    • Economic hardships caused by this deregulation resulted in less pay, longer work hours, loss of insurance and benefits for taxi drivers.

 

The Atlantic – Uber Is Not the Future of Work

  • Digital platforms are becoming increasingly important to Americans’ livelihood and the explosion of these platforms, enabling the gig economy, will fundamentally alter the future of work.
  • Too much attention on these platforms distracts from the real problems in America: low minimum wage, lax overtime rules, weak collective-bargaining rights, and excessive unemployment.
    • 85% of UberX drivers are part time (meaning they work fewer than 35 hours per week).
  • Uber drivers represent significantly less than 0.1% of all full-time-equivalent employment. Based on the fact that uber is the biggest player the gig economy is not as large as portrayed.

 

Forbes – Why Uber Lacks A Sustainable Competitive Advantage

  • The rise of Uber has convinced many pundits, economists, and policymakers that freelancing via digital platforms is becoming increasingly important to Americans’ livelihood.
  • With more smartphone apps being developed and deployed, reliance on the gig economy workforce is becoming greater and forever changing the fundamentals of our future workforce for all companies.
  • The following are the central features when discussing work in America – When it comes to the future of work, these are the aspects of the labor market that deserve the most attention.:
    • a disappointingly low minimum wage
    • lax overtime rules
    • weak collective-bargaining rights
    • excessive unemployment
  • Competitive advantage is measured by profit share – a company’s share of an industry’s profits. This definition means that a competitive advantage is impossible if an industry lacks profitability
  • Reason for market saturation is mostly due to low barriers to entry and the switching costs are low on both the supply side; the drivers – and the demand side; consumers.
    • As a result, the industry features “numerous players offering virtually the same services. They are in a spending arms race to draw new drivers and consumers, bidding up ads on Facebook and Google and forking out hefty bonuses to new drivers,” according to the Wall Street Journal.

 

Legal Troubles: Courts And Legislatures Push Back

NY Times – Uber Hit With Cap as New York City Takes Lead in Crackdown

  • In 2018, New York became the first major American city to pass legislation that will cap the number of for-hire vehicles for a year. This bill also allows New York to set a minimum pay rate for drivers.
  • This has led to a clash amongst interest groups with the taxi industry officials saying Uber was dooming their business, while Uber was making a case that yellow cabs have a history of discriminating against people of color.
  • Due to this new legislation, Uber warned riders that there could be higher prices and longer wait times for passengers.
  • Uber planned to propose congestion pricing. Congestion pricing is to toll drivers entering Manhattan’s busiest neighborhoods. Experts believe that congestion pricing is the best way for New York City to fix congestion and secure the funds needed to fix the subway.
  • The taxi industry has been decimated by the rise of Uber. The price of a taxi medallion plunged from more than $1 million to less than $200,000. Taxi workers support the cap and are hoping that the taxi business improves.

 

 LA Times – Sweeping Bill Rewriting California Employment Law Sent to Governor Newsome 

  • California lawmakers rewrote the rules of employment in legislation that could grant hundreds of thousands of workers new job benefits and pay guarantees.
  • Assembly Bill 5, which curbs business’ use of employees as independent contractors, was approved in the state Senate
  • Considered one of the most controversial of the year, it could strain relationships between bosses and employees in a variety of service-based industries such as ride sharing, nail salons, and construction.
  • Contractors, including many in multibillion-dollar technology companies, are not covered by laws guaranteeing a minimum wage, overtime pay, sick leave, family leave, unemployment and disability insurance, workers’ compensation and protection against discrimination or sexual harassment. Nor do businesses pay into Social Security or Medicare for contractors.
  • Other states have adopted rules to extend benefits such as unemployment insurance and workers’ comp to independent contractors. But California’s bill is arguably the strongest in the nation.
  • Thousands of Uber, Lyft and DoorDash workers have filed misclassification lawsuits and mounted public protests over slashed wages and arbitrary terminations. Others, however, fear that employee status would encourage the companies to curtail their hours and prevent them from driving on multiple platforms.

 

NPR – California Voters Give Uber, Lyft A Win But Some Drivers Aren’t So Sure

  • In the 2020 election, California voters gave Uber and Lyft a big victory and it caused a big setback for labor unions. Voters approved a measure that would allow the drivers to continue to be classified as independent contractors. This is known as Proposition 22.
  • Drivers who did not want the rules to change were featured on TV, radio, and internet ads speaking about why they support the way things are.
  • Uber, Lyft, and DoorDash spent more than $200 million in support of Proposition 22. The opponents of Proposition 22 raised less than a tenth of that amount and their campaign was backed by free publicity and driver protests.
  • The drivers who were not supportive of Proposition 22 felt that drivers were being taken advantage of and that their working conditions needed to improve. The proposition was also opposed by labor groups that helped create the state law that Uber and Lyft were rejecting.
  • Organizers are not going to back down and they will still continue to organize drivers and push for greater labor protections. Uber and Lyft are still facing a lawsuit from the California government. Labor groups are also looking beyond California and other states that are facing off with Uber and Lyft over whether drivers are employees.

 

 LA Times – Prop 22 Ruled Unconstitutional

  • A California Superior court judge invalidated a 2020 ballot proposition that allowed Uber, Lyft, DoorDash, Instacart and other app-based businesses to classify their workers as independent contractors.
  • Proposition 22 claims to protect Californians who choose to work as independent contractors, but it also “obliquely and indirectly” prevents them from bargaining collectively, he wrote
  • Uber vowed to appeal in a statement: ““This ruling ignores the will of the overwhelming majority of California voters and defies both logic and the law”.
  • The ruling comes at a time when the companies are battling efforts in Massachusetts and other states to classify their workers as employees rather than independent contractors.

 

And European Courts

BBC – Uber drivers are workers not self-employed, Supreme Court rules

Washington Post – Could Europe’s Uber ruling affect the future of the gig economy?

  • In February 2021, the United Kingdom’s Supreme Court ruled that the country’s Uber drivers must be considered workers rather than self-employed. This decision leaves Uber drivers with the potential to receive minimum wage salaries and paid federal holidays. 
    • The court’s decision served as the ending to a long-running legal battle dating back to 2016 brought to the courts by Uber drivers seeking employment rights. 

 

  • The Supreme Court considered Uber drivers as subordinates to the company, who could only increase their pay by working egregious hours. The following elements influenced the Court’s decision:
    • Uber sets the terms of each ride on their app, which determines how much a driver can earn. 
    • The company has the ability to penalize drivers who reject too many rides.
    • Driver relationships are measured through a star-rating system, where Uber may terminate drivers if their rating diminishes and/or does not improve.

 

  • Ruling could have larger implications on gig economy, and the benefits gig workers (drivers, delivery drivers, couriers, etc.) currently receive. 
    • Tim Vickers, a sociology lecturer at Nottingham Trent University, believes the ruling goes beyond company control over labor, but ensure that an organization is responsible for the conditions and wellbeing of their staff.

 

  • In 2017, the European Court of Justice determined that Uber must be classified as an actual transportation service, leaving the company open to stricter city imposed regulations and laws. Uber, who considers itself a digital platform rather than a transportation service, would not be forced to employ certified drivers and strengthen their background checks on workers.
    • Previously, Uber had utilized their classification of an on-demand service to skirt the region-specific laws, allowing them to strengthen and expand their market position across the globe.

 

The Future?

Covid… Gig Workers Strike back:

Wired – This Pandemic Is a ‘Fork in the Road’ for Gig Worker Benefits 

  •     Gig economy forces workers to extremes in order to make ends meet. 
    • Many out-of-pocket expenses (health and car insurance, gas) while working long hours due to the minimal pay.
    • To take a day off would mean lost wages many cannot afford.

 

  •  COVID-19 pandemic has put an extreme reliance on gig workers.
    • Delivery workers help provide supplies and groceries to people quarantining in their own homes.
    • Deemed “essential workers” by many cities on lockdown.

 

  • The 20th century economy saw workers spending a long period of time with one company.
    • Adopted policies such as unemployment insurance, employer-sponsored health care, and FMLA (Family Medical Leave Act) laws to respond to the needs of the time.
    • Today, the workforce and economy have adjusted, and rising non-traditional work arrangements need to provide workers with similar benefits.

 

  • Legislators, in response to COVID-19, have adjusted policies to provide relief benefits for gig employees, allowing these citizens to apply for unemployment benefits.
    • This change provides visibility to the gig economy and its workers, allowing the public to understand how not all workers are treated equally. 
    • Growing sense of urgency from both the government, and pressure against companies like Uber, to provide benefits to freelance employees.

 

  • While targeting certain gig sectors and companies, like ride-sharing and Uber, is beneficial to the worker, in order for long-term change to occur then the gig economy as a whole should be considered.
    • Larry Mishel, a member of the Economic Policy Institute, argues that passing rules against one business model is not enough, when there are millions of gig workers employed in separate industries still fighting for equality. 
    • Growing belief that new legislation defining employees and going against the gig economy business will help account for all gig employees and allow for greater worker rights and benefits. 

 

 

Overall Summary of Articles:

During the 20th century, the United States worker was expected to remain at one place of employment for a majority of their careers. To leave a decent position, or even work freelance, was frowned upon and considered irresponsible. However, at the turn of the 21st century and as a result of the 2008 financial crisis, many citizens found themselves out of work and instead turned to freelance and contract work to make ends meet. Over time, cultural opinions would shift and this limited type of work was becoming more commonplace, as the gig economy began to rise, with nearly a third of the entire US workforce being recorded as gig employees.

Uber, founded in 2009 as a “mobility as a service provider”, took advantage of the growing gig workforce through their technology and seemingly lax corporate policies. The company’s business model allowed them to attract freelance and limited workers by appealing to their ideals: flexible hours, quick payments, and guaranteed work. Uber created a sense of worker independence, and their rapid growth and innovation allowed them to quickly expand globally and dominate the driver service market. Over time, though, as the gig workforce began to grow more popular, pressure began mounting on Uber and similar gig employers to provide for their staff as if they were regular full-time employees.

    New York and Los Angeles were both proposing bills to limit the amount of activity that Uber and Lyft drivers could do. In LA they left it up to the citizens to decide on in a vote called Proposition 22 which was voted against, in NY the government voted on it and passed the bill. This limited drivers to the number of for-hire drivers the city could have. By doing this in NY specifically, it is supposed to help the taxi industry as their worth has fallen from $1 million to about $200,000. In LA, the bill was not voted on by the general public which meant that Uber and Lyft drivers would not become independent contractors that would be offered benefits and a set wage. Some drivers are happy with this as they are able to make their own schedules, and some can even earn upwards of $100,000. The drivers who are not happy with it are still continuing to fight to try and get the bill passed into law.

The COVID-19 pandemic forced the world to rely on the services of gig employees to support those quarantined due to the virus. The public opinion on freelance and contract workers have quickly shifted, deeming their efforts as vital to society, and pressure was put on legislations across the globe for employment equality. Courts in both Europe and the United States have begun to pass sweeping legislation for the employment benefit rights of freelance workers, allowing them to secure items such as unemployment benefits and paid-time off. Governments have even begun to come down on gig employers, such as Uber, forcing them to obey regional regulations and provide certain rights to their contracted staff. 

With these changes, there is a growing sense of belief that greater benefits and laws will soon pass in favor of the gig employee. But in order for true change to come the legislation must account for all gig employees and companies, while at the same time not restricting the foundational ideas of the gig economy. 

 

 

Questions:

  1. What is the Uber business model?
  2. Uber is often used as an example of Disruptive Innovation. It has indeed been disruptive off the traditional taxi industry. But is there a significant innovation? If so, what is the innovation? And finally, will it be disruptive for long enough for it to qualify as a disruptive innovation?
  3.  The United Kingdom’s Supreme Court ultimately ruled that Uber must consider their drivers as workers rather than self-employed independent contractors, which entitles Uber drivers to employment benefits. California’s AB5 legislation did the same but was overturned by proposition 22 which in turn has been declared null and void by a low court in California. As the case rises back up to the California supreme Court on appeal it’s indeed possible that Uber drivers in California could be declared as employees. What would be the impact of such a decision? 

 

 

 

41 thoughts on “DISRUPTIVE INNOVATION/THE GIG ECONOMY: THE UBER BUSINESS MODEL

  1. 1. What is the Uber business model?

    The Uber business model is a business model that prides itself on disruptive innovation. Disruptive innovation is defined as an innovation that radically deviates from the norm of an industry. Uber mainly disrupted the traditional taxi cab industry with its ride-sharing business. Uber requires people to have an app to call drivers to take passengers from one detonation to another. Taxi cabs don’t use these new apps. They don’t have the same technological infrastructure that companies like Uber and Lyft have. Uber’s business model also doesn’t; ‘t use traditional cab drivers in that anyone can apply to be an Uber driver without background checks or anything. They just need to fill out an application on the app.

    From my perspective, I see Uber as a company with a highly-advanced technological business model based on peer-to-peer transactions. In other words, Uber drivers and passengers mainly arrange monetary transactions by using the app to negotiate travel from one destination to another. The driver drives to their nearest available passenger after the passenger has booked a trip. Then the driver arrives and takes the passenger to where they need to go for a small fee. One should note that Uber’s business model also differentiates from traditional cab drivers because Uber drivers don’t take cash for their ride fare. Instead, Uber drivers and their passengers conduct their business through credit transactions on the app. A rider can choose to pay by credit card or other acceptable forms of payment on the smartphone that doesn’t involve the exchange of liquid currency.

    Additionally, Uber’s drivers work on the app, meaning they have a more range of freedom over their schedules. Some can apply to take ride fares from bars at night, and others can choose to work with daytime commuters. THere’s no strict schedule imposed on these drivers, unlike traditional taxi cab drivers. One should also note that because Uber has had success in these endeavors, they have now vastly expanded their operations to fit more consumer demands. An example of this would be during the pandemic when many Americans needed more food delivery services, and traditional restaurants had to shut down. Uber’s new food delivery service that helped feed many Americans during 2020 was Uber Eats. It showed greater adaptability of the company to seize upon new revenue-growing opportunities during a difficult time.

    Overall, Uber is a very technologically-based rideshare company. It is responsible for disrupting innovation in the American rideshare industry. It’s a part of the “Gig Economy,” a growing movement of freelance laborers looking to solve very niche issues with their own particular set of skills. This movement has also been marked by an increase in technology in the current business environment. As more and more companies are moving towards using technology to help improve the effectiveness and efficiency of their daily operations.

    2. Uber is often used as an example of Disruptive Innovation. It has indeed been disruptive of the traditional taxi industry. But is there a significant innovation? If so, what is the innovation? And finally, will it be disruptive for long enough for it to qualify as a disruptive innovation?

    As mentioned in my previous response to Question 1, Uber is often associated with disruptive innovation. It has dramatically disrupted the traditional taxi industry with more freelance work and more excellent connectivity to technology. Since more and more millennials and Get Z are connected with technology, we see a more significant trend of Uber and Lyft becoming more popular. They are outpacing traditional taxi companies in urban areas like Chicago and New York City. Because of Uber being so convenient and easily accessible to these more youth, I argue that we see significant disruption as these traditional yellow taxi cabs are falling out of favor with the new crowd. The main innovation Uber brings to the table is the flexibility for their drivers to be able to work whenever they want and the fact that the technology associated with this company is helping them improve the speed and efficiency of their operations.

    To exemplify this, were have to look at traditional taxi cabs today. These taxis are mainly hailed when drivers usually notice passengers trying to signal them down on the sidewalk. Then they stop and allow the passenger to enter and drive them to their specific destination for a cash fee. For Uber drivers, all they have to do is get an alert on their smartphones that a passenger requests a ride in an area. After, they go to the location quicker and accommodate the need for a ride more practically than traditional taxi cab companies. Unlike these taxi cab drivers, Uber and Lyft drivers don’t have variable amounts of work. The reason why is that technology dramatically helps them accommodate higher levels of passenger demand. Due to this, I see no reason why Uber can’t maintain its control over being a great disruptive innovator in the ride-sharing industry.

    3. The United Kingdom’s Supreme Court ultimately ruled that Uber must consider their drivers as workers rather than self-employed independent contractors, which entitles Uber drivers to employment benefits. California’s AB5 legislation did the same but was overturned by Proposition 22, which in turn has been declared null and void by a low court in California as the case rises back up to the California Supreme Court on appeal, it is indeed possible that Uber drivers in California could be declared as employees. What would be the impact of such a decision?

    The impact of considering Uber drivers workers rather than self-employed independent contractors would mean that Uber would have to pay their employees more. As qualified employees, they have entirely new labor standards around them. If one is classified as a worker, they are entitled to a standardized wage and health, dental, and other insurance benefits that legally must be provided to them. Currently, Uber drivers in America often struggle to make ends meet due to being classified as freelance contractors and not employees. Freelance contractors aren’t afforded many of the rights associated with their profession because they aren’t employed by one company. They are just traveling workers who can easily choose to leave their jobs and switch careers without any hassle.

    In my opinion, the impact of this decision would be significantly in favor of Uber drivers in America. It would help to increase labor benefits and make the U.S. labor environment more equal and beneficial to those in poorer communities. Unless Uber decides to brand their employees as workers themselves and give them the right to unionize and bargain for more rights, I would argue that the overturning of the previous judgment is the only way Uber drivers in America can attain more personal financial freedom during these difficult times.

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    1. Hi,

      When considering how the new legislation would impact Uber moving forward, I had chosen to look at it from the company’s perspective. Where they would be forced to commit more spending and resources to their employees, I felt it would lead to an increase in their overall prices and overhead. I had not, as you had mentioned, considered how it may actually attract more drivers to Uber in the hopes of securing these benefits. I think that is an interesting perspective, especially considering the current job market and high unemployment numbers. I think it is also interesting to consider how the current rich unemployment benefits given out during the pandemic have helped lead to these high unemployment numbers, and yet rich employee benefits may actually attract people back to work.

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    2. Hello,

      I agree with your comment that Uber will continue to dominate the ride-sharing industry. I believe that taxis will ultimately become obsolete within the next few years. Uber and Lyft have proven time and time again that it is much more convenient to order a ride through an app instead of having to hail down a driver. This push to using apps to order rides can even be contributed to the fact this upcoming generation tends to be less social and would rather do tasks through their phone instead of from conversation. Taxis raise concern for uncertainty. Depending on the area that you are in, it can take a while to actually get a taxi while standing out in different weather conditions. Uber allows the user to choose what kind of vehicle they would need and know exactly when it arrives, providing for more stability. Additionally, there is now an added safety to using Uber instead of taxis. Uber has features on its app that keep your safety in mind incase of incidents, such as a driver going rouge. You are able to be tracked to help alert authorities whereas taxis do not provide this feature. Uber is still beginning this revolution to using apps for many other tasks, such as food delivery. This idea will only continue to grow and will innovate many other ways to follow this format.

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  2. In the case of Uber, it is certainly an innovation and disruption to traditional businesses. It turned regular cars into revenue streams for people, just as Airbnb turned empty space into fixed income. Uber has made hailing a ride easier, by using an application to connect drivers and consumers. Additionally, rating systems help protect drivers and consumers, ensuring a better experience. Sure, there are troubles with this, in the case of background check negligence, amongst other issues with localities, but they changed transportation service.

    Uber’s plan has also changed drastically since their inception, with acute detail placed on data mining. This could be to pave the way for autonomous services, but they also market and sell this information to other companies. Note this arguably has helped paved the way to Uber Eats and the like. Their route planning akin to client information provides an unfathomable amount of data regarding personal preferences. What are the most requested location drop offs? In cities? In rural areas? Are they for food? This data is aggregated, analyzed, and even sold. It is helping Uber predict emergence of new markets and services and acclimate.

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    1. Hi Jesse,

      I agree, Uber’s technology has not only allowed them to enter and disrupt an existing market space in driving services, but it has also allowed them to grow and enter new service areas, such as Uber Eats. In my opinion, the main benefit of Uber against previous taxi companies, is their convenience. It has allowed them to make taxi services a second thought, almost making them completely obsolete in the modern technological age. And as Uber grows it will be interesting to see if they try to expand even further into additional markets beyond ride sharing and deliveries.

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    2. Hello Jesse, I really enjoyed reading your post, as you showed many interesting points on how Uber has changed their particular market. To some extent I agree that they have changed a couple of thing nevertheless, the idea behind it is the same idea of a taxi which is a driver taking a passenger to their destination in exchange of money. They did have initiative in making some changes and coming up with a digital platform that would help some of the issues the taxi market could have nevertheless I do not believe it has what it needs to be a disruptional innovation, but I do agree it was a clever and innovative one.

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      1. Sam, Joe, and Jesse, I wanted to add to this discussion about Uber being “disruptive”. Uber changed the supply structure of this industry. As a platform business, Uber actually serves 2 customers: the passenger (demand side) and the driver (supply side). I think Apple could be similar in this way in that they created a 2nd customer group as well: app developers.

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  3. 1. Uber is a transportation service that has changed and rethought the traditional taxi system. Uber is a more convenient way for people to get an at will ride. People use their phone apps to order a ride to the destination that they want to go to, and then they are able to track their drivers movements until they arrive to pick them up. Regular everyday people can be Uber drivers as long as they fill out the application. Uber drivers get to pick their own hours, and get to select the riders that they want to pick up.
    2. I believe that the significant innovation is that Uber riders are able to see their drivers photo, their license plate, and their star rating which is the rating that other riders give their drivers. The taxi industry has also been known to be discriminative towards people of color, with Uber there is no discrimination with the riders. With laws and propositions like Proposition 22, I am unsure if it will be able to be a disruptive innovation for long enough.
    3. The impact of Proposition 22 on Uber drivers could be detrimental to drivers’ profit and freelance of the positions. If they were to become employees, there would be set hours, set pay, and benefits. By doing this, there could be less Uber drivers as most do it just for extra pay separately from their full time jobs. With fewer Uber drivers, there would be a higher need for taxi’s, or it could create a negative effect like people no longer calling for a ride and driving drunk. It could also create higher prices for riders.

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    1. Hi All,

      Nicely explained the uber model.

      1. Uber follows a businees model that became popular in the era of technological innovation. This is called two sided marketplace, and it has a simple premise. You create a platform with great user experience, some elements of gamification, make it easy for two sides of a transaction to connect. This happened especially in industries where those two sides were prevented from transacting as the industry was dominated by a third party, which extracted most of the profits for that industry. When that third party is removed via the two side marketplace, the owner of theplatform collects a fee from both sides of the transaction.
      2. An article posted on World Economic Forum caught my eye. According to the site, Uber is not a disruptive innovation and the reasons are as follows:
       Uber has not moved up from the low end of the market – the company targets customers that have already been cab users multiple times
       Uber has been determined as cheaper than taxis, but it’s not considered “inferior” to cab or taxi services
      Disrupters start by appealing to low-end or unserved customers and then migrate to the mainstream market. Uber has gone exactly in the opposite direction: building a position in the mainstream market first and subsequently appealing to historically overlooked segments.” Uber has not originated from a low end of the market and did not target no consumers. Uber was launched in San Fransisco that already had a powerful and successful taxi transportation service. When Uber was invented in March 2009, daily taxi-cab customers that were already in the habit of using transportation services used Uber as well. Havard Business Review supports the idea that Uber cannot be a disruptive innovation because the company achieves the opposite of disruptive innovations: “Uber has quite arguably been increasing demand – that’s what happens when you develop a better, less expensive solution to a widespread customer need.”
      I see Uber as disrupting the norms of society, but I can also see how Uber has enhanced the taxi-cab business. Currently, I see Uber as a strategic innovation, not a disruptive innovation. Although more and more people are using Uber for its cheaper prices and its wider availability, it has only highlighted the importance of transportation services throughout the country. It shows how efficient and widespread the use of taxis and cabs are to the daily lives of human beings.
      Uber is actually not a disruptive innovation but technology that is improving our overall economy.
      3. If Uber drivers are declared as employees, the uber per rider fare would go up and the current model of freelancing would be disturbed. For many it’s the side hustle to get extra money. By being employee, people would have to devote a specific number of hours and that would not be feasible for many. The other costs and benefits related to employees will also increase for uber. Like complying with various laws related to employment. It would mean changing the whole fee/commission model

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      1. “Uber cannot be a disruptive innovation because the company achieves the opposite of disruptive innovations: “Uber has quite arguably been increasing demand – that’s what happens when you develop a better, less expensive solution to a widespread customer need.”

        I found the above comment very interesting. As the professor mentions uber did something that existed better. Why should they be villainized for being innovative.
        However the same argument could have been made by Andrew Carnegie when he was the impersonation of innovation in the steel industry. His steel helped American cities grow. However despite all his innovation just like with uber he realized that he had to drive down cost. And his workers suffered. With uber we see a similar parallel, granted in a more civilized way, yet the workers are suffering.

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  4. 1) Uber has a unique business model where people use their phone to get a ride to any destination. Uber is a unique and better taxi service. Uber allows the user to see the rating of the driver and information of the driver before they pick them up. Also, the driver can see the rating other drivers left for the user. The user can also track the destination route and gives you an emergency button just in case anything goes wrong. Uber’s business model allows anyone be an Uber driver and earn income by selecting the hours they want to work.
    2) I believe Uber is disruptive innovation towards the taxi industry and is making the industry go digital. The innovation behind Uber is that in todays world you can do a lot of things on your phone and the younger generation is taking advantage of this digital trend by catching rides. The younger generation likes how easy and simple an Uber or any ride service can be called. The disconnect is with the older generation who would prefer the taxi. Uber would slowly become the prefer way to ride than the traditional taxi cab because of the digital advantage Uber has towards the younger generation.
    3) If Uber were to consider the drivers employees, there would be less drivers because Uber would demand they work an amount of hours. There would be a set salary, hours, and i doubt there would be benefits. The Uber drivers would skyrocket prices in order to fulfill their expenses. The reason people become Uber drivers is to develop income when they aren’t working or when there is free time in their work schedule. If a Lawyer was an Uber driver because he didn’t have clients, i extremely doubt he would commit into becoming a driver full time than a Lawyer. It really depends on the person and the income they need. The people that would benefit from this would be the taxi industry who are already working full time as drivers. It is best to allow flexibility for the drivers Uber has and to not commit them to a schedule that doesn’t work for them

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    1. Hi Anthony,
      I agree with you that technology advancement especially in the field of mobile phones enabled uber to be a easy solution to taxi cabs. Leveraging technology uber eliminates the overhead cost that a cab company would have. Switch board, drivers as employees etc. The gig economy can be a nice filler as you mentioned but it can never replace a full time job that provides additional benefits such as insurance, retirement income etc.

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    2. Hi Anthony,
      I enjoyed your post, great job with it. I agree with everything you said, in addition, I enjoyed your answer to question three. I mainly talked about the impact on other companies which rely on gig workers. It did not cross my mind on how the Uber drivers would be impacted along with the actual company and I think you are right that there would be a decline in Uber drivers due to the company putting requirements regular employees would have to meet.

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  5. Uber has a two-sided marketplace business model. There are two primary sides of Uber Business Model: Taxi Drivers: Uber provides their taxi driver better flexibility in work and addition income as per their terms. It’s very easy to become an Uber driver. A shortlisting process is done at the Uber offices, after which the drivers are registered as Uber drivers and provided with Uber phones for connecting to passengers.

    Passengers: Uber fulfills all kinds of transportation needs of the Passengers. Uber enables passengers to avoid car ownership and transport inefficiency. Passengers need to download the Uber app to avail its services. Uber provides the details of the driver and the estimated fares to be paid at the destination. Moreover, passengers could also track their booked rides.

    Uber is now providing a wide range of services to its customers. Its service starts from cost-effective rides to premium luxury cab booking in advance as per the convenience of the customer. Few of the major services as follows: Real-time ride tracking, Plan ahead with Scheduled Rides, Add multiple drop-off points, Split the fare seamlessly.

    If were uber was ever forced to treat its drivers as employees then the business model would no longer be profitable as the expense of keeping an employee would surpass their individual driver income.

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    1. Hello Ervis, you had a really interesting post. After reading your post I found interesting how you mentioned that if Uber was forced to treat its drivers as employees then that would make their business not profitable anymore I do not believe they would not be profitable. I believe this is idea that the new gig economy is brining forth to reduce responsibility and accountability to their company. These companies are trying to take advantage of people while having minimal responsibility in order to cut costs and make more money for the shareholder. As President Biden Tweeed “gig economy giants are trying to gut the law and exempt their workers. It’s unacceptable”, This companies have the means to give their workers benefits and still be profitable nevertheless they decide not to in order to profit the shareholder,

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  6. 1. Uber’s business model relies on a sharing economy, where consumers, such as myself, would utilize their application to directly order services. Initially beginning as a “mobility as a service” provider, anyone with the Uber app could request or reserve a ride, and a freelance driver would help take the rider to their destination. Uber has since expanded from ride sharing, venturing into food and product delivery. As mentioned, Uber relies on freelance and part-time drivers to complete all transactions, allowing anyone to apply to become a driver, where they then work on their own hours and at Uber’s designed rates. It allows the company to take a hands-off approach, while also allowing them to initially skirt costs such as training, retention, and even certain employee benefits and salaries.

    2. Uber’s app has allowed them to alter the ride share market. Previously, in order to secure a ride or taxi service, you would need to contact a courier/taxi company and schedule the ride in advance. Depending on your location, it would sometimes be difficult to even secure a ride based on where the service operated from, or it would come with a surcharge. Uber’s app has made the process faster, easier, and more geographically friendly. Planning in advance is no longer needed, if you need to order a ride or delivery you would just request it on your app when needed. And Uber’s ability to hire wherever has allowed them to create a global presence so anyone can utilize their services. While Uber was formed in 2009, I do believe they, along with services such as Lyft, have caused a disruption to the delivery and ride sharing market. Taxi and driver services have lost a tremendous amount of market presence, almost making them obsolete without the help of legislation.

    3. By legislation forcing Uber to provide their drivers with certain benefits similar to full-time employees at a regular company, it may impact the overall pricing for their services. Providing staff with benefits such as insurance, FMLA, or paid-time off, comes at high cost. In order to combat these extra expenses Uber may be forced to increase the ride services, which may turn customers away to competitors or the service altogether. If Uber feels it can no longer operate in certain markets because of legislation passed against them, I think there is a chance they pull their services from certain areas/cities across the globe in general. It will ultimately come down to price, and Uber will operate in the way which generates the most profits.

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    1. Hey Joseph,

      You’re right about the issues in changing Uber’s workers from freelance contractors to traditional employees. I suspect that Uber doesn’t want to change their workers from freelance contractors to conventional employees due to various reasons you listed above.

      For one, by changing their workers from freelance contractors to traditional employees, they would effectively require them to hand out more benefits such as paid leave and dental insurance. Freelance contractors don’t need this treatment because a traditional company doesn’t employ them. They are effectively just temporary workers who can choose to leave their jobs at any time. Suppose Uber does decide to change their workers over from freelance contractors to traditional employees. In that case, I suspect these new benefits and higher standards will largely cannibalize their profits.

      Secondly, by branding their workers as traditional employees, Uber may fall at risk of increased unionization efforts in their company. Unions are groups that advocate for an employee’s best interests. An example of this would be with the MLB Player’s Union and their relationship with the MLB Owners., The player’s union and owners must agree on a collective bargaining agreement before the start of the season every five years. There may be no traditional baseball season if one cannot be worked out. Unionization is a considerable threat to Uber. Because if workers decide to unionize, then that means they can quickly go on strike to protest bad working conditions and shut down’s Uber’s business for weeks or months on end. Suppose Uber’s workers are branded as traditional employees. In that case, I also suspect that this will lead to more complex labor negotiations between the company and its workers.

      All in all, it would be in Uber’s best interest for them not to have their workers branded as traditional employees. If this occurs, Uber may have difficulty securing higher profit margins and working out complex labor agreements with their workers. From my perspective, I don’t see Uber winning this fight. Since, in liberal states like California, there is more of an increased emphasis on the Democratic party’s values, including workers’ rights. California is one of the few states with a $15 minimum wage, so that should tell you all you need to know about their labor policies. In the end, I hope Uber can try and adapt to this changing climate. I also hope the company does more to better their relations with their employees unless they risk going out of business due to bad corporate policies.

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  7. Founded in March of 2009 as a ridesharing digital platform, Uber evolved from being a new platform to a really popular platform used by myriads of people on a daily basis. Uber business models consist of connecting passengers that are looking to get to a destination with a driver that will take them to their destination of choice. They work as the virtual market place for drivers and passengers. Uber gains money from getting a percentage from every ride. Below is an an interesting article with an image of some Uber’s business model concepts.
    https://mobisoftinfotech.com/resources/blog/uber-business-model-explained/
    Taking the definition of disruptive innovation from the discussion above it “is an idea/product that establishes a new market or enters an existing market, which then overtakes the incumbent products before it. It does so by providing new benefits which its predecessors do not and cannot provide” Thus, I do not believe Uber can be deemed as a disruptive innovation as it is a digital product that entered an existing market (taxi market) and it provided features that the existing market could also provide. They did not do something so innovative they just created a platform and used people as taxis without giving the driver’s many benefits except getting paid as Uber does offer insurance for the cars of the drivers as the drivers are independent workers.
    I believe that if proposition 22 is deemed as unconstitutional this could benefit many Uber drivers as it will allow them to get benefits from Uber. Benefits such as medical insurance, dental insurance, paid sick days amongst others would help millions of Uber drivers. I strongly believe Uber has the financial capacity to do so nevertheless as capitalism expects they have to make more profit every year for the shareholders. They accomplish this through cutting costs even if those costs make millions of people without benefits. All of that for the riches of a few powerful and already rich individuals.

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    1. Hey Samuel,

      I liked your unique take on how Uber isn’t an example of disruptive innovation. You mentioned how the company is simply entering the ride-share industry and offering something that the existing market could provide. However, I respectfully disagree with this assertion. Taxi cabs are far more outdated than Uber’s cars because taxis are a more standardized ride share service. They have little to no variety in the vehicle makes and models used to ferry people from place to place.

      To exemplify this, an Uber driver can pick up a passenger in a BMW or Mercedes offering more comfort and class than a traditional yellow taxi cab in New York City. Not only do these vehicles provide a sense of luxury to their customers, but they also provide added technological capabilities. These include GPS, Apple Car Play, and other features; they offer more choices and comfort to their riders. Unlike traditional taxi cabs, which lack these features.

      Overall, I believe that Uber is an example of disruptive innovation. It does more to differentiate itself from the competition and seizes upon more of these growing technological consumer trends in the 21st century to better adapt to consumer taste. Suppose traditional taxi cabs want to keep up with Uber. In that case, I’d suggest that they do the same in updating their old makes and models used on the streets of urban areas like New York City. Also, to compete with Uber by lowering their prices lower than the competition and adjusting to their peer-to-peer business model. If traditional taxi cabs took these measures, I could see them overtaking Uber in terms of business in the next couple of years.

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    2. Hi Samuel, I thought you did a great job here. The article you included was interesting, and helpful in learning a bit more about their specific business model. Your points about it not being a disruptive innovation is actually quite interesting. While I said that I thought it was, your comments are making me wonder if it’s not. It is entering a market that has the ability to do what Uber is doing, yet they have not. All they really did is just design an app to do something that has been done for a while but with more features and accessibility ease. I think your examples are spot on and definitely provide strong support for this stance.

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  8. Central to the Uber question is whether its low pricing has been used just as a marketing technique to enable it to acquire new customers or whether it is in fact housed in a business model that allows it to sustainably offer its services at lower cost.

    1. Uber has a sustainable business model that is lower cost than its black car service competitors, as Uber has said it is profitable in the United States. Uber pioneered its technology in a facilitated network business model—in which customers exchange things with one another—which is radically different from the traditional business model black car services use.
    this unique technique facilitated network business model, because every ride has a low marginal cost for Uber given that Uber doesn’t own any cars, the more people use Uber, the more valuable and profitable the service is. Each additional ride through Uber represents almost pure profit. Uber is profitable in the United States with UberX comprising a large part of its business. As with its black car service, Uber took advantage of excess capacity from drivers who already own their cars and were now leveraging their downtime from earning income—a powerful advantage because it eliminates the fixed costs of buying medallions or owning taxi cabs. Along those lines, its technology also eliminates the need for the taxi companies’ middleman dispatch services, which have to scale in line with increased demand in contrast to Uber’s platform where support staff only have to increase as it experiences something closer to exponential growth. The fact that UberX is significantly lower cost than taxis and powered by a technology enabler that allows it to move up-market and improve extremely rapidly inside of a business model innovation that makes it almost impossible for taxis to respond effectively feels like a classic disruptive innovation relative to taxis once accounting for the counterintuitive up-market move it made from UberBlack to UberX.

    Uber’s real fight for drivers and passengers is no longer with taxi companies, but with Lyft, Didi Chuxing, and other competitors that may enter the market. And Uber’s powerful need to continue to climb up-market makes me think it is worth watching its larger ambitions of replacing car ownership as well. This disruptive story is not yet over. And it should serve as a cautionary tale for all who think regulations can prevent disruption from occurring.

    2) UberSELECT, an option that provides luxurious cars such as limousine at a discounted price, is an example of disruption innovation. Uber is not disruptive to taxis is that it does not meet the classic tests of a disruptive innovation because it did not originate in a low-end or new-market foothold and because it caught on with the mainstream quite rapidly in a way that has been described as being “better than” the incumbents. But Uber has followed a disruptive path to its success so far. Before taking on taxis, Uber started in the black limousine car market. There appears to be more widespread agreement that Uber is disruptive relative to black limousine car services, but it’s still worth analyzing Uber in this context because its origins are critical for understanding what I believe is its unique up-market path.
    1) Uber began by serving people who wanted to have a black car service but could not afford it.
    2) The Uber version of a black car was not as good or reliable as booking through a traditional black limousine service, but it was better than the alternative for the nonconsumers of those services—no black car service. Uber’s inferiority to traditional black car services comes from its recent announcement that it is experimenting with allowing users to schedule a ride “anywhere from 30 minutes to one month in advance”—a classic sustaining innovation to move closer to the performance traditional black car services offer.
    3) In the case of Uber Black, it was far more affordable than a traditional black limousine car service.
    4) Uber’s mobile technology platform that it built alongside of mobile phones’ GPS technology, which allows drivers to navigate passengers to their destinations, has allowed it to improve over time in terms of reliability, quality of service, and availability without adding the fixed costs of owning cars and having a manual middleman dispatch service. Its up-market move to try and leverage its platform to allow users to schedule rides in advance.
    5) A technology can be used as a sustaining innovation to improve an existing service or it can be deployed in a new, viable business model that allows the entity using the technology to come to market with a simpler, more convenient, or more affordable value proposition than existing offerings.
    6) Uber actually created business for the drivers of the black limousines, as it increased their utilization and allowed them to make money by driving when they would have been otherwise idle—an example of “tapping excess capacity” that has “been paid for, but from which new value could be found,” as Robin Chase, the founder of Zipcar noted in her own piece about why Uber is disruptive. This insight has been one of the key elements that has allowed Uber to price its offerings so much lower than the incumbents—both in the limo and taxi markets.

    3.The central point for me is that the ruling focuses on the control that companies exercise over people’s labour – this control also carries with it responsibilities for their conditions and wellbeing. This is even more important in the context of the pandemic.” many drivers have been struggling financially and feel trapped in Uber’s system. self-employment grants issued by the government only cover 80% of a driver’s profits, which isn’t even enough to pay for their costs.

    https://www.forbes.com/sites/michaelhorn/2016/06/20/uber-disruptive-innovation-and-regulated-markets/?sh=1b863d437fb8
    https://www.bbc.com/news/business-56123668#:~:text=Uber%20drivers%20must%20be%20treated,minimum%20wage%20and%20holiday%20pay.&text=Uber%20said%20the%20ruling%20centred,made%20changes%20to%20its%20business.

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    1. Hi Madhavi

      I enjoyed reading your discussion. I liked that you include UberSELECT the option that provides luxurious cars such as limousine at a discounted price. This shows that Uber is more than just a ride share company, but can expand into other markets. they have expanded into the food delivery service, luxurious cars and even helicopters for transportation in some areas. by expanding into these markets it really disrupts the flow because other companies need to change to compete with Uber.

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  9. 1. Uber is a transportation company but not in the traditional sense like a taxi. Uber plays a role of “matchmaker” between customers and drivers and takes a percentage of the fare for providing this service. Their value stems from the screening Uber conducts on its drivers to ensure safe rides for customers. They brand convenience with an app that allows customers to track drivers in the area with estimated time of arrival and departure. The company has grown substantially since its founding in 2009.

    2. I believe the technological aspect of Uber is disruptive innovation. Compared to a typical taxi service, Uber provides an app for customers to set up a personal account. This allows for customers to save their payment information, home pickup address, and shows previous ride information. These features make it easy for customers to quickly grab a ride from a driver without having to constantly update these fields. As someone who lives in the suburbs, Uber is a much easier experience than traditional taxi. It is much harder to find a taxi or car service in suburban areas compared to cities. Uber is able to fill that void for customers who don’t have easy access to taxis. This innovation has already been adopted by competing ride sharing companies such as Lyft, making this disruption less innovative. Customers can now choose from a variety of ride share services which affords them more decision power.

    3. The impact of the UK and California’s efforts to make self-employed ride share workers into full time employees could affect the customers alongside the employees. Free-lance drivers would have less flexibility over their hours if made permanent employees. Companies like Uber and Lyft would be able to dictate the hours worked for their drivers which would make this service less ideal for new employees. Part of the allure to working as a free-lance driver is being able to set your own schedule and to decide to refuse customers if they wanted. For customers, the price of these ride share services would inevitably go up. Uber and Lyft would have to pay benefits and salaries for their driving employees. That cost could trickle down to the customers in terms of higher fares, making the service less appealing.

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    1. Hi Tom,
      Great post! I agree with you that Uber is disruptive innovation since it changed the method of the taxi industry completely.
      I would like to add one more comment to the third part about the regulations for California. I believe this would result in a higher customer fee since Uber has to bypass the employee benefit costs. On the other hand, this decision might help the traditional taxi service capture a small percentage of the lost market.
      Thank you,
      Cici Ouyang

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  10. 1. The Uber business model is considered the gig model and its disruptive innovation.
    2. Uber is disruptive innovation since it changed the old method of the traditional taxi industry. It changed the way how customers obtained the taxi service in the past, and it also changed the work method for drivers completely. Customers can get a taxi service over the app on the tablets at any time without calling the taxi center to make a reservation. The customer could now waive the extra fee to get the taxi on the street. On the other hand, the drivers could have flexible working hours. In my opinion, Uber has met the definition of disruptive innovation.
    3. As such a decision, Uber drivers in California will not be able to serve all different taxi platforms. Uber might pass the fee to the customer to compensate the benefits of declaring Uber driver as an employee. On the other hand, this decision might help the traditional taxi service capture a small percentage of the lost market.

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    1. Hi Yongshi,
      You touched on an important point which was the ease of access of obtaining taxi service through a phone application as opposed to trying to find a taxi or having to call a taxi center to make a reservation. I think as we’ve seen in recent years, the use of phone or tablet applications to simplify tasks is becoming more commonplace, so I think apps like Uber and Lyft are here to stay. I think the taxi industry will need to adapt to this new approach to be able to compete.

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    2. Hi Yongshi, great response. Uber is definitely changing the traditional car/driver industry. Uber is saving them a lot of time, and gives them the advantage of beating out sales over competition, like taxi or limo services. The flexible hours also makes it great for the workers. You make a good point about how the company could start to charge the customer more in order to make up for the increased pay and benefits to the “new” employees.

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  11. 1. Uber’s business model focused most importantly on the flexibility of its workers. Workers were able to work flexible hours, received payments almost immediately, and were kept busy working as long as there were people who needed transportation. By not hiring “employees” and classifying their workers as “self-employed” Uber was not required to follow certain requirements for their workers such as health benefits. The main benefit with Uber that attracted many was that it was quick and easy to be hired and flexible with hours.
    2. I think Uber’s main innovation was changing the way people obtain transportation. Many, people would need to seek out transportation by finding a taxi, locating the nearest subway or train, or planning in advance to schedule a pickup. With Uber, it became much easier and faster for people to acquire transportation, simply with a few commands on their phone. Then, as opposed to seeking out transportation, the transportation came to them. I think these two points (ease and convenience) are what truly innovated and disrupted the taxi industry, and it was enabled through the use of technology. I also do believe that Uber (and now Lyft) will stay around long enough to become disruptive innovations. It will be interesting to see how other competitors adapt.
    3. If Uber drivers were considered employees, they would be entitled to more benefits such as health benefits, unemployment insurance, and workers comp. These would come at a significant additional cost to Uber to provide these benefits to their workers.

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    1. Hi David, I enjoyed reading your response. I also mentioned how easy it is for people to call an Uber, rather than waiting or trying to find a taxi. By them staying and improving, it can definitely cause a continuous disruption. I also said the same thing with the benefits, which would certainly cause Uber to lose a lot more money.

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  12. Uber, which was founded in 2009, seems to establish a unique business model that differs from anything we have ever seen. It follows the concept of a “gig economy”, and an emerging freelance workforce, which allows potential employees to work on their own time. Uber clearly took ideas from the limo and taxi services, but instead wanted to figure out a way to take out the issue of scheduling.
    As described in the thorough discussion here, Uber has significantly disrupted the taxi industry, which resulted in the end of many taxi related companies and employees. According to some of the examples, many people feel that Uber might not sustain its value and ideals in the near future. I do feel that the innovation is significant in terms of its digital and technological aspect. Uber utilizes interesting software advancements to allow customers to see all the information necessary for a safe trip, such as driver information and ratings and details of where they are going. Uber also has the advantage of accessibility and speed when compared to taxi companies. Taxi companies could create issues with people waiting and not catching a taxi, whereas Uber is tailored for the individual who is booking a ride. It has certainly disrupted the norm in this area, and could continue to do so in the future as their technology grows.

    Having Uber drivers become full employees rather than independent contractors can create a huge shake-up in their business. It would mean that all drivers are under the same pay and would have to be managed more carefully. It would also mean that they would become entitled to certain benefits, and there might be some questions as to differing part-time and full-time positions. Having all drivers registered as employees does not seem appropriate for the business model and would definitely change the company. While many drivers would probably appreciate the benefits, this is more of a side job for most and could cost the company millions.

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  13. In simple terms, the Uber business model is to connect potential passengers with available drivers using mobile technology. They are the facilitators of a transaction which takes place between two separate parties. What separates Uber from other ridesharing companies (Lyft, taxi cabs, etc.) is their convenience and level of service. They provide real value to consumers (and drivers), which caused a big disruption to the taxi cab industry. In addition to providing excellent service, they have low operating costs. Drivers use their own cars when working for Uber, and they are hired as independent contractors, which saves Uber on having to pay benefits.

    I do believe Uber qualifies as a disruptive innovation. While most will agree that Uber is “innovative” by the use of a digital platform to connect passengers and drivers, I think what makes them “disruptive” is the fact that they completely changed the supply-side of the industry. Uber’s customer group is not just the passengers (the demand-side), but the drivers as well (the supply-side). This is similar to Apple in how they essentially created a second customer group: app developers.

    I’m not sure if there’d be a huge impact with the “employee” legislation. Uber would appeal this decision and argue they are simply a digital platform, and that this legislation applies to transportation companies. They could claim their “customers” are actually the drivers. It would require some operational changes by Uber, but ultimately, I think it’s possible they could get around this loophole and continue to pay drivers as independent contractors.

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  14. Hi Joseph – I agree with you and think this is a fantastic response. When most people think about Uber, they typically put them in the transport/delivery service category versus the technology sector, but I agree with your perspective about connecting people and they’re really just an app company. Uber would use that stance also to deny that the drivers who utilize their app should be considered employees versus maybe thinking about it as a membership. This would allow Uber to still hold drivers to a certain standard, but they wouldn’t have to incur the incremental costs with employment status. To your point, keeping them as contractors instead.

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  15. Uber is undoubtedly a disruptive business model. By the very nature of the many work streams they operate in, be it transportation, food delivery, or tech/app services they have made a major impact on business and peoples lives. In many cases Uber has transformed the transportation industry from the traditional taxi cab to a more reliable, traceable, and on demand service. But not all has been good when it comes to Ubers disruptive tendencies, specifically their impact on restaurants as a small business.

    A study done in 2020 working with a Chicago based Pizzeria, Chicago Boys Pizza, gleamed that Customers had paid $1,042 for 46 pizzas; the delivery company, which is based in Chicago, had taken $666 in commissions and fees. That is more than 50% of their total sales. Of the $666 in fees Grubhub charged the Illinois pizza restaurant, only $94 was earmarked for delivery. By comparison, $206 was the generic “commission” charge, the baseline cost of doing business with the app. An additional $231 covered “promotions,” which is basically the cost of not getting buried in the app’s search rankings. Kind of reminds me of a corporate form of racketeering and as you can see have these convenient services integrated with your business seems like a great idea to tap into the consumer convenience of the gig economy, it certainly comes at a cost.

    UberEats controls 60 percent of deliveries in Miami, and in most major metropolitan areas, a single delivery app dominates, according to the research group Second Measure. With more sales volume being driven through these apps, not only are more costs being passed onto the consumer, I know someone who paid $17 to have a coffee delivered from Dunkin Donuts, but the higher costs that will come to the restaurant or small business using these services. I often wonder the restaurants that serviced the pandemic, with the expedited adoption of delivery service apps, will that be their ultimate demise?

    Uber will continue its expansion into other areas but I do think this will be as more of a tech company being the primary driver behind their entry. Through their app their services can expand significantly because they have such a high user base. Really their ability to access the population in some capacity as a social network more than anything else might be their greatest asset.

    https://www.washingtonpost.com/outlook/2020/05/29/delivery-apps-restaurants-coronavirus/

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    1. 1. What is the Uber business model?
      Undoubtedly Uber breaks the shackles of monopolies of the traditional taxi market in the United States which was afflicted by laws, limiting the availability of taxis that could be hailed in ways that extended well beyond basic security considerations.
      All drivers of all vehicles should have a license, and all cars on the road should undergo a battery of safety and environmental inspections.
      An exponential business model examines the same major areas as a standard business model, but with drastically different objectives.
      There must be two major reasons why every business wants to adopt an exponential corporate strategy.
      • If their services satisfy their customers, they receive free publicity through positive word of mouth and ambassadorship.
      • Users contribute significantly to the platform’s effectiveness and success by providing feedback and reviews…
      Uber breaks its barriers and reaches to transportation business providing helicopters and boats. And Uber Eats provides food transportation to three segments: (bike)drivers, restaurants, and customers. The concept is the same, the value proposition is the same, but the types of customers are different.
      Uber introduced a standard platform to connect the consumers with services to put it simply, Uber does not own any cars. It aggregates or collects cab drivers that own their own vehicles but work under the Uber brand. While the actual service is supplied by partners, Uber ensures that service standards are maintained — the cars arrive on time, are hygienic, take the correct route, and assure the customer’s safety by maintaining servers.

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      1. 2. Disruptive innovation applies to innovative ideas and inventions that enable pricey or complicated products and services more affordable and inexpensive to a larger market. But it doesn’t represent a fundamental innovation.
        Earlier, the traditional taxicab market in the United States was afflicted by laws that limited the availability of taxis that could be hailed in ways that extended far beyond basic security considerations. All drivers of all vehicles should have a license, and all passenger vehicles must pass a battery of environmental and safety testing. Obtaining a license to drive an automobile is, however, a rather standard process in all states.
        While wait times vary, Uber users spend significantly less time waiting than regular taxi customers. Riders can also share trips with others traveling in the same route via UberPool, the app’s ride-sharing feature. As a result, Uber clients often get to their destinations faster or for less money than they would with taxis.

        https://www.businessmodelsinc.com/how-to-design-exponential-business-models

        3. Proposition 22 categorized app-based drivers as independent contractors rather than employees or agents.
        California’s AB 5 legislation created a three-factor test to determine whether a worker is an independent consultant.
        (1) The worker is free of the hiring company’s guidance and coordination in the performance of the work;
        (2) The worker is doing work outside the company’s standard course of business.
        (3) The worker is engaged in an established trade, employment, or business with the same nature as the work performed.
        A California appeals court has ruled that Lyft and Uber must designate their drivers as employees rather than independent contractors, backing with a previous court that concluded the ride-hailing companies likely violated state labor law.
        This decision is a setback for Uber and Lyft, which claim that the laws don’t apply to them. Both corporations were previously warned to move out of state if they were obliged to hire their workers.
        Uber and Lyft are going out just to oppose AB5 as it may also have an influence on their food delivery services! In my point of view, Uber opens a gateway for the freelancing market where anyone can work following some regulations. If uber needs to follow every state’s law of treating workers as employees then, it doesn’t work and will be disruptive for Uber. Take as an example of Walmart which is the biggest employment company with revenue of $ 559 Billion is affording only 3million employees and Uber whose revenue is about $5.78Billions couldn’t afford $4million employees with the revenue . Hence, it would be Disruptive to Uberization.

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  16. The Uber business model is certainly one that falls into the category of disruptive innovation, in that it has broken away from the traditional business structure. Where formerly, people hired as taxi drivers by taxi companies would be called upon by people looking to get a lift across the city or to and from home or work, it is now far more common for people to hail an uber using an app on their smartphone. Uber drivers are not hired by Uber but rather are independent contractors. They own their cars which they use to service clients and can control their own hours when they want to work. These types of employees who are more or less “freelance” or “independent contractors” are part of a gig economy. In a gig economy, the workforce is made up of these freelance short term employees instead of employees who hold regular waged jobs. For Uber, they receive a portion of the money paid for the transportation or food delivery service and therefore rely heavily on the prevalence of these gig workers.

    The concept of getting transportation from another service is not new. Neither is the idea of getting food delivered from a restaurant. Public transportation, in this case, a taxi cab; or something like a pizza delivery driver when you order from an italian restaurant are, from the outside, very similar to hailing an uber or using uber eats to deliver your food. The difference lies in the fact that the employees who work for uber are freelance individuals who are contracted. Another big difference is Uber’s utilization of the internet. Since Uber is an app based service and arguably one of the earliest app based services. In that respect, I think it is innovative to utilize smartphones and apps to create a ridesharing app as an alternative to other forms of public transportation. In today’s society, especially Americans, we want instant gratification. Using Uber or other rideshare services gives the user control and ability to set preferences, which is something I think will lead to Uber’s long term success as a disruptive innovation.

    Uber is definitely growing at a rapid rate. In the United States, independent contractors or freelance workers aren’t subject to certain tax regulations. If they were to be employed by Uber due to a change in laws and regulations, a few things would probably happen. Drivers would have state taxes taken out of their paychecks and therefore the general prices of a ride would increase. If Uber prices became too high, consumers might transition back to traditional public transportation like taxis or buses.

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  17. 1. What is the Uber business model?
    Uber’s business model is that it works as a digital aggregator app platform which connects passengers who need a ride from point A to point B with drivers that are willing to serve them. Uber acts as facilitator to make this happen.
    2. Uber is often used as an example of Disruptive Innovation. It has indeed been disruptive off the traditional taxi industry. But is there a significant innovation? If so, what is the innovation? And finally, will it be disruptive for long enough for it to qualify as a disruptive innovation?
    I think there is significant innovation when it comes to Uber because they were the one who pioneered the ridesharing path and then Lyft and other gig jobs came along like DoorDash, Grubhub, etc. I think eventually Uber, Lyft, and any other ridesharing platforms will just be as normal as taxi’s once were and with, I think it will not be known as disruptive for long.
    3. The United Kingdom’s Supreme Court ultimately ruled that Uber must consider their drivers as workers rather than self-employed independent contractors, which entitles Uber drivers to employment benefits. California’s AB5 legislation did the same but was overturned by proposition 22 which in turn has been declared null and void by a low court in California. As the case rises back up to the California supreme Court on appeal it’s indeed possible that Uber drivers in California could be declared as employees. What would be the impact of such a decision?
    The answer is in the question, the impact will lead to Uber drivers in California to qualify for certain employee benefits. In addition, other companies which rely on gig workers such as DoorDash and Grubhub might see their employees follow the path of Uber drivers to gain employee benefits.
    https://mobisoftinfotech.com/resources/blog/uber-business-model-explained/

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    1. Hi Arman

      Great post this week! I agree with you that I think there is significant innovation when it comes to Uber. They were the first of their kind in this industry and made others soon to follow the success. along with ride sharing they later introduced ubereats which also lead other companies like doordash to create food service apps. Uer has been an innovator for transition since the beginning and it will be interesting to see what they will do next in the future.

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  18. Uber’s business model is represented by a sharing economy, this means that most people can use their app to order transportation by people who have chosen to be drivers. The company and app originally started with just being a car transportation service for people. The drivers for the company were freelance drivers. The freelance and part-time drivers are what Uber uses to complete all transactions. Almost anyone can apply to become a driver. From this they work their own hours at Uber’s designed rates. This allows Uber to take a different approach, that allows them to bypass costs such as training, benefits and other expenses. Uber has since grown and expanded from just car driving. Uber has added food and product delivery as well as other transportation like helicopters.

    Being in the age of technology Uber and its app has changed the way we use transportation. Before Uber there were basically only taxis, and unless you were in a major city you would have schedule a ride in advance. This could be difficult if rides were not available or if you did not have the services near you. Uber changed all this. Their innovation made the process much faster and simpler with being ready at any time if a driver is available. Uber can do this since almost anyone can be a driver which allows people all around the world to drive for them. Uber has definitely caused disruption to the delivery and ride market. They made it much easier than Taxi. This along with other companies similar are pushing out the taxi industry and could one day make it extinct.

    If legislation forces Uber to provide their drivers with benefits to “full-time employees” like regular companies, it will impact the pricing for their services. These benefits can cost a good amount for the company and an expanse they would need to figure out. By having a price increase to their services to out way the cost for benefits, this turns some consumers away as it would be too much. This could even lead to leaving certain areas if the cost outweighs what is being made in money. It will be interesting to see how this will unfold for the company and employees in the future.

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