On Your Mark, Get Set, Go Public!
Uber, Lyft & This Fleeting Moment
Ten years ago, the word “uber” meant extreme, excessive or superlative. It did not trigger notions of ridehailing, protests or public policy dilemmas.
Ten years ago, Lyft did not exist: as a company, a noun or a verb.
Ten years ago, in May 2009, smartphones were in their infancy, not even two years old.
Fast forward ten years, take a step back, and some days it feels as though the world has shifted beneath our feet. Uber and Lyft are now public companies, with IPO valuations of $80 billion and $23 billion respectively (both of which continue to take a hammering… but we’ll get to that). In less than a decade, these platforms have gone from unknown oddballs (“who would ever get in a stranger’s car?!”) to digital darlings, to the scourge of cities, nemesis of policy makers, taxis’ devil incarnate, and boon for people without accessible, affordable transportation in cities worldwide.
Perhaps we should have paid more attention to that “uber” definition, after all.
In today’s insta-access-everything world, it’s all too easy to forget the history of what unfolded. So I thought it would be worthwhile to capture that context, as I stood on the 50-yard line as these platforms and the broader ‘sharing economy’ grew up.
On Your Mark: The First Five Years (2009–2014)
The setting: Detroit. The boardroom of a major U.S. auto manufacturer. I had been invited to lead a workshop for the company’s executive innovation team on the ‘transportation sharing economy.’ However, I had also been advised that the word carsharing wasn’t taken seriously and I might not want to mention it. So I found myself trying to explain RelayRides (now Turo), Uber, Lyft, BlaBlaCar and a handful of other shared-used transportation options to a roomful of SVPs who, while kind and professional, looked at me incredulously: “But that is ridiculous. That will never work. How does it even work, anyway? Forget it.”
Concurrent with these private-sector efforts, I was advising a range of governments, raising a pink flag that these new shared-use transportation platforms had the potential to be both disruptive and helpful for cities, but that it would require policy reform to regulate them appropriately. Not a public sector leader — anywhere — agreed, back then. The typical response was a combination of mild interest and ennui: thank you for the heads-up, but (1) this is too “fringe” and decentralized to be on our radar and (2) don’t you trust that we know how to govern our transportation system already?!
Around the same time, I was invited to the World Economic Forum in Davos. My elevator pitch that entire Alpine week was, “do you know what the sharing economy is?” Perhaps not surprisingly in retrospect, the response was roughly the same: 90% of the time, dead silence. The other 10% of the time: “oh yes, isn’t that some hippie thing?” As if a business model that involved sharing couldn’t possibly be commercial, or legitimate, or… well, we’ll get to that, too.
Get Set: The Last Five Years (2015–2019)
The tides began to shift in late 2014, perhaps early 2015. On the one hand, this waking-up was significantly later than would have been wise. On the other hand, without today’s hindsight it is difficult to know what might have prompted it earlier. In any event, by the time policy makers began to recognize the scope of the disruption — and transformation — underway, the gap between platform technology capabilities and public policy had begun to widen considerably. Uber went broad and global, while Lyft went deep and domestic. In April 2014, Lyft launched in 24 new U.S. cities in 24 hours, bringing its total to 60 U.S. cities. (Today that number is 640 U.S. cities and 9 cities in Canada for Lyft, and 600+ cities in 65 countries for Uber.)
This was the era that funding for these startups was a big question. They had attracted initial growth capital, but their future was far from certain. It may sound hard to fathom today, but back then, questions bandied about included: would Lyft survive at all? Would it be acquired by Uber? Would this all come crashing down?
In some ways, cracks did begin to show, not least Uber’s governance shortcomings and revelations of initiatives such as Greyball, technology designed specifically to evade authorities worldwide. Company leadership muddled through; the replacement of Travis Kalanick by Dara Khosrowshahi a teledrama in itself. Investment capital came in droves — allowing the platforms to operate through deep and long-term losses, public sentiment be damned — and conversations about the future of multi-modal transport and “mobility as a service” went mainstream. If the pace of change had felt fast before, we hadn’t seen anything yet.
The seeds had been planted for challenges to what I call the Five P’s: People, Profitability, Performance, Policy and Purpose:
- People: Driver well-being and wages, as well as customer safety.
- Profitability: By the companies’ own accounts, their current business models may never be profitable, so the bet is on huge shifts in the future.
- Performance: Impacts on traffic, CO2 emissions, affordability, accessibility, insurance and beyond.
- Policy: Are these platforms complementary and collaborative with public transport (as they have claimed for years) or competitive to it (as their IPO offering documents reveal)?
- Purpose: Improving accessible, affordable, sustainable transport is a good thing for humanity. Is that what we’re doing here, really?
Go! Public, That Is (2019-)
And here we are. May 2019, with both Lyft and Uber having gone public, yet few if any of the Five P’s answered. The day before Uber went public, a large percentage of its “driver partners” protested for better pay and working conditions; this hardly speaks well about the company’s purpose, ethics or culture. (Note to Uber PR department: this is not the time to highlight driver reward programs.) Its share price plunged 20% within two days of trading, which bodes poorly for anticipated performance, but that also depends on whether you take a three-month, three-year, or thirty-year view.
Among many, the primary sentiment of the IPOs is underwhelming: not just poor financial performance, but the fact that these platforms have created very real, very thorny problems for society at the same time that they have solved others. Whether being exposed to stricter scrutiny (as a public company) will make much of a difference remains to be seen. Whether the companies pick up the torch to remedy some of these burdens is a big question mark. Indicators thus far, not least continued losses and broader NLRB rulings, are not encouraging signals that they will do so.
At the same time, this is not the time to be pointing fingers. We can accuse pretty much everyone — platforms, leadership, policy makers, even customers who will opt for a cheap ride over a living wage — of dropping the ball in some way. But we can also realize that the upsides and downsides are choices we make. Moving forward, we can harness this history, reveal our blind spots, and demand more: of the companies that operate in our cities and communities, and of our own decisions to support them.