IS UBER SUSTAINABLE?

Hope everyone has had a chance to listen to the lecture and process it. I end the lecture with two broad questions / concerns:

 

1. Do we need to reevaluate our understanding of the Uber business model? What is the innovation? Is that innovation easily imitable? And other such questions that go back to the core of the Uber business model. Was it venture capital sustained growth? Will shifts in the independent contractor status of its workers create new pressure?.

2. And coming out of all of those reconsiderations, the new question is simple: IS UBER SUSTAINABLE?

 

I would urge all of you to do some additional research around some of the issues raised in the lecture as you begin to think about your response here.

35 thoughts on “IS UBER SUSTAINABLE?

  1. After listening to the lecture on Uber I believe that we do need to reevaluate our understanding of the Uber business model. The innovation Uber created is the app that connects passengers with drivers and gives a space for regular people to make an extra income as a driver. However, that innovation is easily imitable which could be detrimental for Uber’s sustainability. Moreover, one of Uber’s main comparative advantages is their avoidance of regulation; they do this by using free lance drivers and noncommercial cars, which allows Uber to avoid costly commercial insurance that the taxi market has to cover. Nevertheless, since they do this through an app that is easily imitable comparative advantage as the entry of the market is not that hard which could affect their sustainability as a titan in the market. Also, going back to their comparative advantage of avoidance of regulation if there are shifts in their independent driver status that will definitely create lots of pressure on Uber as their biggest comparative advantage will be affected immensely.
    All in all, I do not believe Uber is sustainable due to many reasons. According to Forbes one of them being that “the industry features numerous players offering virtually the same services .”As the entry barrier is easily accessible that makes them less sustainable. Also, it is not sustainable due to the fact that investors are willing to fund other start-ups in the market which is detrimental for Uber’s sustainability. In conclusion I believe that if Uber wants to become sustainable they have to change many things and work on a comparative advantage that sets them apart from the market for a long period of time.

    https://www.forbes.com/sites/petercohan/2019/04/13/why-uber-lacks-a-sustainable-competitive-advantage/?sh=22c40ec62065

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    1. Hi Samuel, I enjoyed reading your response. Your points in needing to reevaluate Uber’s model definitely make sense, even though I said the opposite. The pressures of going from independent drivers to employees of the company with benefits and such could certainly shake up the company and create concerns or new issues, and could jeopardize their sustainability. Uber must work on something to gain an advantage, like you mentioned, which would allow them to continue to be sustainable.

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    2. Hi Sam – I large;y agree with all the details in your response and it got me thinking, what is that competitive advantage that Uber can gain over its competitors. Their for business of providing an app for ride hailing is set to recover at great strength comparing to pre-pandemic numbers. Chief Executive Officer Dara Khosrowshahi said he’s “confident” the company’s ride-hailing business will hit record highs in 2022. Uber also sees its delivery business posting incremental profits “at or above” long-term profit-margin targets of 5%, Khosrowshahi said, citing expansion in the company’s delivery audience of 25% year-over-year.

      As competition among rapid-delivery startups intensifies, Uber will focus on developing partnerships with grocery stores instead of building fulfillment warehouses of its own. “Partnerships are our first priority,” the CEO said. Uber will look to boost growth “organically” in online grocery delivery through its partnership with Cornershop, the largest home delivery platform in Mexico and Chile. International expansion is incredibly difficult with different laws and regulations specific to the countries you operate in and that makes it difficult to built standardized process, particularly with all the data privacy and regulations such as GDPR in Europe and the UK. It’s also very expensive, so of a Uber can make it work it’s unlikely they’ll see much competition internationally and could dominate the international market.

      https://www.bloomberg.com/news/articles/2021-12-14/uber-sees-its-best-week-during-pandemic-despite-omicron-variant

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  2. 1. Yes the shifts in the independent contractor status of its workers create new pressure. In order to pay for the drivers, Uber has to really pushing ride fares. Uber has to face new challenge whether it can still be disruptive innovation or it has to re-evaluate business model. Whether people will take demands set by Uber or not especially in this pandemic era.

    2. I don’t think Uber will be sustainable because investors are willing to fund rivals who compete away all the profit in the industry and more. The capital lets rivals replicate Uber’s basic strategy while charging low fares and paying up for drivers. For example, Lyft raised more than $2 billion since its start and lured numerous riders as Uber struggled with scandals that hurt its brand. Lyft has also aggressively offered discounted fares in recent months. This put the brakes on Uber’s growth. Uber said that its revenues have been diminished due to “heavy subsidies and discounts by our competitors” which the company has been matching “in order to remain competitive. In the last quarter of 2018, this price war cost Uber growth in the revenue it gets from ride-sharing. For instance, total fares paid by riders rose 9% but its adjusted revenue which tracks Uber’s share of rider fares paid was unchanged. The total bill paid to drivers and restaurants by Uber Eats customers rose an impressive 20% while Uber’s share of those revenues tumbled 14% during the quarter. The share prices of these companies could rise if they can grow revenues much faster than investors expect. But since they compete in inherently unprofitable markets without sustainable competitive advantage, investors should look elsewhere for public equity profits.

    https://www.forbes.com/sites/petercohan/2019/04/13/why-uber-lacks-a-sustainable-competitive-advantage/?sh=20f8cd0d2065

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    1. Hi Madhavi, I thought you left a great response. The shift in status from individual contractors will definitely result in pressure amongst the employees. Your comparison to Lyft was very beneficial, especially in explaining how Uber could not be sustainable in the near future. If investors continue to invest in companies that seem to have the ability to replicate Uber, it could definitely jeopardize their sustainability.

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    2. Hi Madhavi,

      I found your response for the second question interesting considering you had an opposite view then i did. i believe that uber will be sustainable. Reading your discussion made me look at the question from a different perspective. the way that you broke down certain numbers and aspects of the company like when you stated that “total fares paid by riders rose 9%”. This gave me better understanding of both sides of this topic.

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  3. 1. At its core, Uber is an on-demand service company which connects directly to the consumer through their application. Through the hiring of independent freelance and part-time workers, Uber has allowed for convenient and quick access to ride-sharing services, before expanding into fields such as delivery and shipping. The technology of the company has lead to an increase in the consumer’s want of an on-demand economy, where wants and needs can be satisfied instantaneously. While difficult to imitate based on the technology available, competitors such as Lyft, GrubHub, DoorDash, and more, have grown over the past decade copying the successful Uber business model. Initially, Uber, along with Lyft, relied on venture capital and private financing in order for the businesses to grow. There was faith in these organizations for long-term growth and profits, and both have succeeded.

    2. Even with the pandemic, Uber and Lyft have survived off of the necessity of their delivery services and the employment desire from people misplaced from their previous work. And while these freelance workers may now receive certain employment rights due to new legislation, I believe Uber and Lyft are at a point where the increased costs can be covered. Whether this will mean both services must limit the number or drivers at their disposal, or increase their service costs is to be seen, but the popularity of the service these companies provide are unmatched at the moment. While consumers may feel the brunt of these changes, I do believe customers are willing to look past the costs because of the convenience factor, making the models of Uber and Lyft sustainable.

    Sources:

    https://mobisoftinfotech.com/resources/blog/uber-business-model-explained/

    https://automarketplace.substack.com/p/was-uber-and-lyft-built-on-venture

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    1. Hi Joseph,
      Great call out about the ease of access and the convenience of Uber. I think one of the most critical aspects of technology is how user-friendly the application is. The application can have all the bells and whistles in the world, but if it is not easy to use, it will not be successful. I think this is an area where Uber succeeds. However, with that being said, I am unsure how switching from independent workers to hired employees would impact their performance as a company. The cost is very important, and if we were to see the prices double, I think there would be fewer people willing to use Uber.

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    2. Joe, to comment on a few of the things you have stated, I believe were all very good points. The pandemic really changed a lot of Uber and Lyft drivers job functions because no one was traveling, therefore not needing a ride to the airport or to and from work and the train stations/subway stations. Thankfully, they were able to remain in business with the other ventures that you mentioned like Uber Eats. Another great business move that I would like to add is the ride discounts they give around New Years Eve and Super Bowl Sunday. So many lives have been taking by drunk driving that these ride share services are trying to combat that by offering lower prices and even free rides to their riders to make sure that everyone makes it home to their driving. Over the years, the use of these services has gone up especially around high drinking holidays. With this comes risks for the drivers specifically as designated drivers still do come into the path of drunk drivers, but the hope is that with time, more people will take up these opportunities of free and discounted rides around the holidays, and even when it is not the holidays as well.

      https://www.jdsupra.com/legalnews/new-year-s-eve-brings-new-risks-for-4159264/

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  4. 1. Do we need to reevaluate our understanding of the Uber business model? What is the innovation? Is that innovation easily imitable? And other such questions that go back to the core of the Uber business model. Was it venture capital sustained growth? Will shifts in the independent contractor status of its workers create new pressure?

    One does not need to reevaluate our understanding of the Uber business model. The definition of innovation is any valid extension or addition to an existing invention or organization that enhances or expands upon the functionality of the prior model. An example of this would be the innovation of hybrid vehicle engines that cut down on fuel costs compared to their regular counterparts. This innovation allows automobiles with hybrid engines to travel farther distances than their previous iterations. For Uber, their real innovation is in their use of technology to pick up passengers. Technology has made ride-sharing businesses like Uber and Lyft have much more success in picking up passengers than traditional taxi cabs. Because with the advent of using application-based technology to connect passengers to drivers, there is a greater rate of customer use than simply trying to hail a taxi on a busy and crowded street. Although this innovation has led Uber to become one of the most popular ride-sharing companies in America, its issue is that its form of innovation is easily imitable. Other competitors like Lyft are trying to get a piece of the market using the same business model. However, the issue with imitating Uber’s business model is that one needs a lot of connections and resources to do it. Companies like Uber and Lyft only got so far because wealthy venture capitalists were investing in them. Both only just got on the public stock market as recently as 2019.

    Additionally, this innovation can collapse because shifts in the independent contractor status of its workers create new pressure, as with a recent appeal of the decision to uphold/pass Proposition 22 in California. Proposition 22 was the bill that allowed Uber and Lyft to declare their workers as independent contractors and not regular employees. With this in mind, these companies had fewer taxes to pay on their employees’ payroll and did not have to give out many benefits due to this distinction. If the past decision is not upheld, then Uber and Lyft will suffer drastically in terms of the financial cost to compensate their workers. In the end, yes, Uber is still an innovative ride-sharing business of the 21st century that has dramatically transformed the industry from the norm. However, suppose the threat of new entrants and the overturning of Proposition 22 in CA are to occur. In that case, Uber may lose both its foothold on the market and its robust and differentiated innovation.

    2. And coming out of all of those reconsiderations, the new question is simple: IS UBER SUSTAINABLE?

    For Uber, its technological adaptation, and its ability to have fewer taxes paid for classifying their drivers as independent contractors, has made them sustainable. They have a working business model that allows them to disrupt the traditional taxi cab industry with the advent of technology, allowing more people to connect. Plus, this smartphone technology has also allowed revenue opportunities to pop up, such as the taxi-hailing ability that Uber has seen. It should also be noted that in classifying their drivers as independent contracts, Uber pays less in taxes and pays less in terms of benefits to their employees. So long as Uber can keep up with the market competition in the ride-sharing industry and keep up with the fight to keep their employees classified as independent contractors, they can still be sustainable. However, if all these competitive advantages fade away or if the automobile gradually gets passed out in favor of public transportation in large urban areas, one could see Uber losing their sustainability in the ride-sharing industry.

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    1. Hello, I enjoyed reading your explanation here. I agree that we should not have to reevaluate the Uber business model, since their innovation is something we have all already been aware of. I also agreed with what you stated, regarding their ability to keep up with competition. If they can do this, then they should be able to continue their sustainability. Hopefully they find ways to do so.

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  5. In my opinion, we do not need to reevaluate the Uber business model and our understanding of it. We have always been aware of how Uber revolutionized the car transportation service with such a simple fix. The innovation here, as mentioned by the group earlier in the week, was disruptive innovation, which enabled Uber to surpass its competition, in the form of taxi and limousine services. The innovation Uber has created is something that can be easy to replicate from a competitor, but it would take a lot of resources to do so, including software that is easy to manage, and the ability to do background checks on potential drivers. The shift from making Uber drivers employees from their original independent contractor state can create new pressure, as these drivers would be under full-management of Uber. They would still be able to work their own hours, presumably, but would probably have to meet a certain weekly quota in order to maintain that status.

    In the end, I do believe that Uber can only remain sustainable if they find ways to stay above the competition. There are known competitors, like Lyft, but with anything, there will always be well-known competition with little differences. This is a clear example in this case. Uber is widely used and seems to persist through the years, with competitors like taxis and limos not trying to meet Uber’s advancements. I believe that Uber will be sustainable as long as they stay up-to-date and allow the continued ease for both users and drivers as they have now for years. If competition does decide to find ways to replicate Uber’s techniques, the Uber sustainability could collapse. This question could be supported fully either way, and it all depends on how Uber finds ways to stay at the top.

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    1. Hi Jared,

      I agree that Uber’s business model was brought on by disruptive innovation, and I will go further to argue that it was created due to their technological innovation. As I mentioned in my post above, their technology revolutionized the ride sharing market in the aspect of allowing them to connect to consumers right away. A person could decide in the moment that they need a ride, no matter their location, and simply request a driver from their couch with just a couple of pushes on their phone. This is something the regular taxi/limo services could not replicate, and their services were nearly made obsolete.

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      1. Hi Jared,

        I agree with you that Uber can remain sustainable if they find ways to stay above their competition. With Lyft having 39% of the market, almost all of the rest of the market belongs to Uber. Uber’s brand awareness is huge. I have heard people use ridesharing and taking an Uber synonymously. This comes from Uber being present in 65 other countries in addition to the United States. In comparison, Lyft only operates in the United States and in Canada. Uber is the dominant ridesharing company in the U.S. and has made huge inroads internationally. The company’s advantages are significant and will likely help Uber continue to grow in the coming years.

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    2. Hi Jared,

      I agree that we do not need to reevaluate the Uber business model and our understanding of it. i think it is a simple model that Uber has created and sustained. I think that aspects of the model will need to be adjusted going forward in the future to stay relevant, but companies have to do this. Companies need to change with the times or they will get left behind. a great example of this is Netflix. The company started off as a service that sends DVD to homes to rent and adjusted to one of the top online online streaming services. Great job on the discussion!

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  6. 1) The business model for Uber does not need to be reevaluated. Uber’s model is very immutable and causes Uber to try and stay competitive in the industry even though they are a founding father of this innovation. This puts a lot of pressure on Uber to decide if independent contractors and venture capital firms will put them in a better direction to turn profits. If Uber cannot stay competitive then Uber’s business model does need to be changed and reevaluated.
    2) I don’t think Uber is sustainable because other competitors in the industry will find ways to make money over Uber. Uber’s business model can be copied and modified very easily, there is nothing extremely innovative about it. When Uber might face a lawsuit or bad criticism, people might look else where and go to their competitors. Since Uber is in an extremely competitive market that barley has competitive advantage or sustainable profits, venture capital firms and investors should look another direction.

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    1. Hi Anthony,
      I enjoy reading your post, and I found the second part sounds quite interesting to me. Uber undoubtedly changed the taxi industry and shifted the drive to another level. Others could easily copy Uber’s business app and model. However, the traditional taxi industry could not compete with Uber since Uber has a driver from the gig market where one could become a driver. In addition, the cost for Uber driver compared to full-time driver are much less. Therefore, I suggest that full-time yellow cap drivers are allowed to install the Uber and Lyft app on their phones to increase the chance to generate more income.
      Thank you,
      Cici Ouyang

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    2. Hi Anthony,

      I can understand your perspective on how it could be difficult for Uber to remain sustainable. Uber faces key hurdles that investors need to be aware of. Some of these hurdles include driver lawsuits, expenses, international competition, and additional regulations. Uber’s international plans haven’t always panned out. In 2016, Uber lost a ridesharing battle in China even though the company spent billions of dollars trying to establish itself and finally sold its business to Didi Chuxing, its China rival.

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    3. Hey Anthony,

      Great post! Although I have to respectfully disagree with you that Uber is not a sustainable business. I would argue that Uber has successfully adapted to radical technological transformations in the current age of business to make their company more appealing to the younger generations. Using the app to hail drivers down is much more convenient than simply trying to find a taxi on the street. Additionally, since Uber can brand their employees as independent contractors, this means that they again have less tax liability than other businesses in the ride-sharing industry, such as the traditional taxi market in places like New York City or Chicago. Both the adaptation to technology and the ability to pay less in labor costs makes Uber a much more sustainable business than other companies in the norm.

      I also wanted to highlight that you mentioned how Uber’s legal troubles could make people switch companies. The problem with that is that Uber can make their business more appealing in times of legal crisis by making their business more consumer-friendly. They could lower prices, offer more deals on rides, etc., in order to deflect attention away from whatever legal trouble they may have at the moment. Therefore, Uber can shake off lawsuits more easily. In the end, concerning Uber’s sustainability, I believe they are still a sustainable and innovative ride-sharing business in 2022.

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  7. In general, I will still consider Uber to be a disruptive innovation. However, I revised some of my viewpoints after listening to the professor’s speech. At first, I agreed that Uber’s app was an innovation that changed the whole taxi industry. But I revised my view and agree that innovation is how Uber took advantage of the gig economy. Many other services use the same as Uber’s innovations, such as the delivery industry (Doordash, Panda, etc.) and Lfty in the same taxi industry. This innovation is easily imitable in the gig market. In my opinion, Uber will still be allowed to use in those markets that do not have many regulations or restrictions to labor law. Therefore, there will still be growth for Uber. However, shifting its independent contractor status from a freelancer to an employee will create new pressure. Uber then will pass the cost to the passager and lose part of the competitive market.
    Last but not least, Uber is still considered sustainable in those countries that lack regulations on labor law. As far as I know, Uber has been banned in China, and it’s illegal to use Uber in Hongkong. On the other hand, Uber will also have sustainable growth in the market if the government decides not to shift Uber drivers as employees since many in the gig economy prefer to work in this environment.

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    1. Hi Yongshi,

      I agree, forcing Uber to provide their employees & freelance workers with regular employee benefits will force the company to adopt cost-saving initiatives. During the pandemic, we have already seen the results of these changes and the economic forces, with the cost of Uber services already rising. While I do not believe it will drive consumers away, as I feel Uber still produces a great product, I think it may may people utilize the service less or may second guess whether or not they want to spend the money on the service.

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  8. While initially I thought the innovation for Uber was the app, after listening to the lecture, I’ve picked up on the key point of the independent contractors vs full time employees. The independent contractors provides a huge benefit to Uber, where their variable labor cost for benefits is drastically lower. Additionally, they are able to claim significantly higher wages than what is actually happening. This is because Uber calculates salary based only on the hours that the driver is in transit to pick up or drop off a passenger. In actuality, there is a good amount of “waiting time” where the driver is waiting to find a passenger which does not get factored into the salary that they share. While initially I spoke of the ease of access being the primary driving force for Uber’s success, clearly the cost advantage that they have over their competition in the taxi industry (where in some areas they are able to charge up to 50% less) provides them with a huge advantage. It will be interesting to see if other companies deploy a similar model to Uber as we see more people opting to work similarly to independent contractors without benefits.

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    1. Hi David,

      The contractor vs. employee is a huge threat to uber and any company that leverages technology and private contractors to gain a leg up on the competition.
      Uber and Lyft are built upon very similar business models: a customer requests a ride using either a Lyft or Uber app on his smartphone, the customer is picked up by an Uber or Lyft driver and taken to his destination, the customer’s credit card is charged, and the customer can rate the driver on his smartphone. Uber and Lyft both classify their drivers as independent contractors.

      In two separate class action lawsuits pending in California federal court, Uber and Lyft drivers have sued the companies, arguing that they are actually employees and not independent contractors under California law and are being denied the benefits and protections that an employment relationship provides (minimum wage, overtime, tax withholding, unemployment benefits, expense reimbursement, etc.). If the drivers succeed, these cases could threaten Uber’s and Lyft’s business models, which are structured around their drivers being independent contractors.

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  9. 1. I believe we do in fact need to reevaluate our understanding of the Uber business model. As has been described in our lectures and readings, the business model for Uber is based on a ride share service to customers provided by independent drivers. Uber’s web based application is the most innovative part of their business model, allowing customers to quickly and efficiently find local drivers at a reasonable fare. I believe we need to reevaluate their model for two reasons. For one, imitators like Lyft have already popped up within the industry. They are able to compete with Uber for customers as well as independent driving labor. My other reasoning to reevaluate Uber’s business model is the shifting changes for their workers. Drivers may seek benefits and paid time off, making them more expensive to hire as full time employees. This could force Uber to increase fares to customers to offset the costs to insure drivers. Other drivers who enjoy the flexibility of contracted driving may be reluctant to sign on with Uber if the company were to restructure their labor.

    2. Upon review of the above questions, I still believe Uber is sustainable. Their service is extremely valuable for people without access to their own car and their mobile app is very user friendly. For as long as Uber can keep their workforce employed as independent contractors, they will be able to keep fares at a reasonable rate for customers. Even with stiff competition from the likes of Lyft, Uber has become the industry standard in the eyes of customers. They have even been able to survive unprecedented challenges like the recent COVID-19 pandemic. One would believe a service like Uber, that forces close contact with strangers, might crumble during a time when people needed to distance themselves. The fact that people still used their service during and after the peaks of the pandemic shows how valuable their service is to their customers.

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    1. Hi Tom,

      I thought you made some great points in your post. One of the items that stuck out in particular is in regards to your first answer. You state that the Uber business model should be reevaluated, and I agree. There are new key competitors coming into the playing field and its scope is expanding. However, I do not see Uber fully committing to hiring drivers as full time, at least not in the near future. The flexibility of working for Uber is what makes it successful and changed the game for many contracted workers. Upon research, I discovered that Uber was paying its workers PTO at the start of the COVID-19 Pandemic if they were to be infected. This is the only news of something of this kind and no other news for any future implementations. Other services are advancing for Uber, such as UberEats. I feel that it is only a matter of time that they use their contractor drivers for other services.

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  10. Too big to ban

    With not just success but survival on the line, Uber aims to become too big, fast enough. Becoming big enough would ensure that the political price for any elected official becomes too high to curb Uber. High powered lobbyists can be used to push back the rules and regulations which have been hurting it for long. If claims are to be believed, the company has been investing angel investors’ money to accommodate for predatory pricing. That’s the price many big technology startups have been paying to stay relevant in the market.

    Troubles

    Operational issues and safety violations incidents have popped up time and again. Advanced technology and stricter training requirements for its drivers can help resolve such concerns. But the stringent regional taxi and limousine laws and other regulatory issues are what the company will continue to face as it broadens its footprint worldwide.

    Further, the debate over an employee based model rather than drivers on contract may lead to Uber paying for insurance and other benefits related expenses to its drivers. With the upside of it having better control of the workforce that is the only point of contact to the customers. This can be called a tradeoff in between increased expenditure and decreased control.

    Conclusion

    Amazon owns 5.2% of Aurora Innovation (AUR) – Get AURORA INNOVATION, INC. CLASS A Report, a self-driving vehicle technology company that went public in November through a special purpose acquisition company merger. Amazon first invested in Aurora in 2019.

    In December 2020, Uber Technologies (UBER) – Get Uber Technologies, Inc. Report has sold its self-driving car division to Aurora and invested $400 million in the company, giving it a 26% ownership stake.

    Aurora Innovation Inc (AUR.O) had launched a pilot program with the freight unit of Uber Technologies Inc (UBER.N) to transport goods in Texas and to integrate autonomous trucking into Uber Freight’s shipping platform.
    Amazon, one of the investor in the company has displayed a similar model of a real fast growing startup and has successfully been in operations for last 20 years. For the current stage of development, Uber’s approach seems to not have any downside. The rapid expansion can set a stage for it being hugely successful, global enterprise showcasing a wide range of new possibilities to the world.

    Could face billions in fines if they mislead over wages, FTC official warns:

    Gig economy workers are employed by delivery companies including the range of grocery delivery startups that have grown in prominence since the start of the pandemic. They often are attracted after being touted flexible hours and the ability for people to earn money on the side. “As the pandemic has left many people in dire financial straits, moneymaking pitches have proliferated and gained special attention,” the agency said in the news release.
    Each one of the violations could result in a penalty of up to $43,792 according to the agency. This means that if a company falsely advertised how much a worker can potentially earn, they could be fined billions of dollars, according to Greisman.

    Labour experts and gig economy workers often contradict much-higher average wage claims by gig companies.

    While Greisman was reluctant to not comment about whether the FTC has begun investigations into any gig companies, she said the industry is “an area of serious concern.”

    Source: https://snciimrohtak.wordpress.com/2015/06/22/ubers-strategy-sustainable-or-tech-bubble/

    https://www.reuters.com/markets/deals/self-driving-truck-company-aurora-launches-pilot-with-uber-freight-2021-12-15/
    https://www.chargedretail.co.uk/2021/11/01/uber-amazon-and-doordash-are-all-in-danger-of-receiving-billions-in-fines/

    With compliance labor laws it can become difficult for uber to sustain with the freelance model.

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  11. 1.) While the Uber app was innovative, it is certainly imitable and has been replicated by competitors. The true innovation of Uber was competing with taxi cabs at such low prices. This is hard to imitate, as Uber consistently gave its passengers lower prices despite operating at a significant loss for many years, and using large amounts of its venture capital to cover those losses. If Uber is forced to employ its drivers, passenger prices will certainly increase, which would result in losing some of its customers. They would have to lean more on their reputation and level of service to combat this challenge. I think it’s possible Uber could get around the loophole by claiming their “customers” are actually the drivers, but this remains to be seen.

    2.) I still believe Uber is sustainable. While its competitors have limited barriers to entry, and have replicated their business model, Uber has something most of its competitors do not: notoriety. People use the word Uber as if it were an actual vehicle. If you need a ride to the airport, you “call an Uber”. This notoriety puts Uber in a favorable position to increase passenger prices, so long as they remain competitive. If prices are still reasonable, they will be able to retain market share and bounce back in the passenger sector. Also, by expanding into the delivery sector, Uber has expanded its portfolio and has finally shown profitability.

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    1. Hi Joe,
      You make some very good points about uber and its brand recognition. it is true that there are many competitors worldwide but uber has the brand recognition among consumers. Similar to how we Google everything and don’t Bing it.
      just like you I believe that as long as uber can keep prices low they will be able to compete. The lack of overhead is a tremendous advantage over normal taxi companies who have to deal with wear and tear insurance etc.

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  12. 1. Do we need to reevaluate our understanding of the Uber business model? What is the innovation? Is that innovation easily imitable? And other such questions that go back to the core of the Uber business model. Was it venture capital sustained growth? Will shifts in the independent contractor status of its workers create new pressure?

    The rise of uber has a direct correlation with the current consumer need for instant gratification which has open doors previously closed. Uber model simply tailors existing services to the consumer needs. They leveraged technology and independent contractor status for its workforce to keep cost low and demolish competition wherever they launched. The innovation is easily imitable as we see several uber competitors. But as we see in business with Tesla often the one who gets there first and creates the brands recognition will win and maintain market share.
    One major risk to uber is the shift of their workforce status from contractors (where uber does not have to pay benefits) to workers whoa re entitled to much more. I feel that this change will completely revamp the model where giant conglomerates will no longer be possible and the market share will be divided in much more smaller pieces.

    2. And coming out of all of those reconsiderations, the new question is simple: IS UBER SUSTAINABLE?

    Uber is sustainable because consumers choose to use it. Be it convenience, ease of use, or just habit, uber is here to stay.

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    1. Hi Ervis,

      I like your answer to the second question, simple and straight to the point. But I agree to it. Uber is definitely a sustainable model. It is both convenient to the customer and the workers. The workers have no set schedule and can work whenever for as long as they would like. For the customers, it is a lot easy to obtain a ride without having to hail down or call a taxi company. The mobile use of Uber is also a big part of how it is sustainable. Many means of life continue to be shifted to an online platform, and this is one of the ones that made the initial major jump. I only see progress from here for Uber, as well as many competitors trying to enter the market.

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  13. I absolutely think we need to rethink our understanding of the Uber business model and it wasn’t something I realized until taking this class actually. When most people, including myself, thought about the traditional ride share business model such as Uber or Lyft I automatically put them into the transportation industry but not truly realizing that they are a technology or app company that serves the sole purpose of connecting people, essentially in a very similar way to the way social media companies operate. Facebook as an example has their marketplace, but people who use that service to sell products, good, or services aren’t employees or working on behalf of or at the direction of Facebook. I also think that particular Facebook comes ahead of Uber since they don’t charge their users of Marketplace any or massive fees or rates to use the platform, unlike Ubers relationship with small businesses. Bottom line is Uber is more closely related to a tech company than it is a ride share.

    While it’s entirely possible for new companies to enter this market, it would like be difficult to get into the ride share business with two major competitors already dominating the market share. That being said, I think this is a scalable concept across industries and other companies have used this type of concept to establish their own businesses such as postmates and doordash delivering things people need from retail stores, not only food. These companies also experience the same struggles and challenges with worker relationships and full time employment status of folks who use their platforms in the gig economy.

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    1. Hey Christian,

      You make some excellent points in your response! I agree that we do not have specific classifications for Uber and Lyft in this day and age. Usually, I like putting them both under the label of a “ride-sharing business” similar to traditional taxi cabs in large urban areas. However, I am starting to relax that these companies are more of a public transportation sector, similar to planes, trains, and automobiles. Uber and Lyft advertise the business of ferrying a passenger from one place to another for a fee. The passenger does not have to drive the car or anything. Simply all they need to do is book the appointment in the app and wait to be picked up by the driver, and then be ferried over to their destination with mono efforts at all. Uber is everywhere in the United States and has expanded internationally ever since. Due to their innovative business model and rapid growth, I would argue them to be a sustainable business model because they have transformed the traditional industry.

      Uber allows passengers the convenience of rides from one place to another with minimal effort and lower fares than traditional taxi cabs. They have lower tax liabilities because they can treat their workers as independent contractors. Not only that, but the company can pick up more passengers than other competitors due to their connection with technology. With this and all the points listed above, Uber is sustainable. Though I will admit that, as you said in your response, Uber feels more like a tech company that is a part of public transportation than a traditional ride-sharing business. In other words, because of Uber’s use of technology through their smartphone app by connecting drivers with passengers, they feel much more like a tech business than anything else. Although they utilize automobiles in their business model, this makes them more of a part of the public transportation sector.

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  14. 1. Uber’s business model has transformed the way we use shared cab/taxi services all over the world. It is disruptive and gives lower pricing rides than taxi firms could offer in order to entice customers away from them. Uber now controls the market thanks to app innovation. the advantages of lowering customer wait times and delivering lower travel pricing yet, but it is a long way from turning a profit.
    What are the primary reasons? It must compensate drivers and restrict their access to the site. The additional competition from Lyft has only heightened tensions among drivers, who have complained about poor pay rates and unfair compensation.
    Uber must both convince riders to use its platform and retain its own drivers. It tries to focus and invest in services such as Uber-eats, bike-sharing, air taxis, and autonomous self-driving technologies, but nothing has worked well so far. As a result, Uber must rely on drivers. Only if it can keep its driver army intact will it be able to move into the profit zone in the future.

    2. Yes, Uber is sustainable because of the attention it has received and the fact that it is establishing its own empire on gig platforms that provide employment for a greater number of freelancers with certain controls and flexibility in working hours. It also encourages businesses like Uber pool to make the best use of available resources.

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  15. 1. Uber’s business model creates a two-sided market through the app. The app itself is the innovation. It is easily imitable. Competitors, such as Lyft, have already risen as another service. The taxi companies have also evolved to utilize this innovation with their own apps. Uber has not sustained growth. Based on a Wall Street Journal article, it only recently reported profits over its decade long activity. Independent contract status of its workers can create new pressure. The rate of turnover is already high based on the conditions some drivers experience (i.e. long hours, low hourly rate).
    Reference: https://www.wsj.com/articles/uber-cfo-focuses-on-revenue-growth-after-hitting-profitability-milestone-11637852400

    2. Based on this Forbes article Why Uber Lacks a Sustainable Competitive Advantage and my own views, Uber is not sustainable. It “is not sustainable because investors are willing to fund rivals who compete away all the profit in the industry and more. The capital lets rivals replicate Uber’s basic strategy while charging low fares and paying up for drivers.”

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  16. I do not believe that the Uber business model needs to be reevaluated for our understanding. It is evident that the Uber business model and innovation is quite simple. Uber business model uses an innovation to have an app in which supply and demand of transportation services is provided. The innovation is definitely easily imitable and has been by companies like Lyft, GrubHub, DoorDash. Uber was one of the first and pioneered their business model. Uber at the beginning relied on venture capital and private financing for business growth. From this the company sustained long-term growth and profits. I think that shifts in the independent contractor status of its workers will create new pressure. This will bring new obstacles and expenses to the company that I believe Uber will overcome.

    I definitely believe that uber is sustainable. Uber has created a platform for both people in need of a ride as well as people in need of work. Along with this Uber has also expanded its market. They have expanded into luxury cars, helicopters, and more. Also, Uber has included food delivery services into their company as well. While Uber has had some setbacks as does any company, I feel that it will overcome any obstacles it will face. With Uber continuing to change and expand I do not see any reason why Uber will not be sustainable for the foreseeable future.

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