Is Uber Facing an Existential Crisis?

Shortly after Uber announced that they were testing 1000 autonomous self-driving cars in Pittsburgh, Pennsylvania last July, I saw one such car driving itself in San Francisco, a brown Ford Focus. The performance of the self-driving car, which was accompanied by an engineer, shocked me. I was surrounded by road rage as the Uber technology battled to communicate with pedestrians in cross walks, causing gridlock in the Financial District. The self-driving car caused chaos. They aren’t ready for city driving, I thought.

When Uber later officially launched their testing using Volvo SUVs in San Francisco in December, they ignored an order from the State of California to cease operations. Subsequently, Uber was forced to remove these vehicles from the road after repeatedly running through red lights. (Uber blamed and fired the human companions to the vehicles, incorrectly as it turned out.) As captured in this article in Fortune magazine:

Worse still, the apparently flawed system was deployed against explicit demands by California state regulators that they cease operations. Uber argued that the rules simply didn’t apply to them.

So while self-driving innovations push forward at a remarkable pace by the likes of Google, who has been testing self-driving in Silicon Valley for years, Tesla, and most major automakers, Uber finds itself in a serious predicament. Why? Because Google is suing Uber for theft of its autonomous driving technology.

Uber is facing an existential crisis. But before I get into that, it is as useful as it is entertaining to recap the legal challenge Uber is facing. Google has an autonomous driving subsidiary called Waymo. Anthony Levandowski, one of the original engineers on Google’s self-driving team, left to start Otto, which was acquired by Uber for an estimated $68m last year. The trouble is that Levandowski is accused of stealing the Waymo technology, dubbed lindar, to start Otto, which is now owned by Uber. The details in this Wired article are worth reading.

It’s too early to know how this is going the play out. But we do know that the US courts have the authority issue a temporary injunction against Uber’s entire self-driving car program until the case moves through the courts.

Even a short one-year delay would put Uber’s entire self-driving program in jeopardy as competitors pass it by. If the US courts award Google permanent injunctive relief, Uber would have to start from scratch, find another independent platform to acquire, or be ordered to pay a fee to Google every time you take an Uber. Any of these outcomes would be detrimental to Uber.

This reason this is important is that Uber’s mission is to make it cheaper to Uber around than to own a car. I recently moved to Johannesburg, South Africa, I can assure you that this isn’t the case at the moment. I spent $670 in February on Uber, and more in January. I am car shopping now.

Self-driving Ubers are the key to reduce the cost of ride sharing. As Uber CEO Travis Kalanick told Business Insider last year: “So if that’s happening, what would happen if we weren’t a part of that future? If we weren’t part of the autonomy thing? Then the future passes us by basically, in a very expeditious and efficient way.”

He’s right. The magic of Uber is in the brilliant ride-sharing business model, not its technology. I love riding Uber, but ride-sharing apps are easy to develop these days. When Austin, Texas required Uber to conduct fingerprint-based background checks of their drivers, among other things, Uber and their US competitor Lyft left town. Almost immediately, no fewer than 6 apps sprung up, including the non-profit RideAustin. Ride sharing is alive and well in Austin, Texas and many cities around the world where Uber doesn’t operate.

In Johannesburg, Safari Cabs is Uber’s main competitor. Shesha offers Tuk Tuk rides throughout Sandton, which are a little more expensive but a lot more fun than Ubers. Both have apps. The point is that ride-sharing apps are quick easy to build using existing technology that Uber didn’t invent; smartphones, navigation systems, and online payment processing.

Uber is the undisputed king of the Unicorns, the Silicon Valley term for privately held start-ups that reach a $1 billion valuation. Uber’s most recent founding round valued it at $62.5 billion, although Bloomberg has recently estimated its value to be less than half of that, $28 billion.

It is still early days of this legal battle, so we have no idea how it will turn out. If legal proceedings go against Uber, it would present a serious challenge to their future. By the end of 2017, Uber could fall to a $1bn company. Or they could IPO at a value of $62bn, or higher. We just don’t know.

For us commuters, however, it doesn’t matter. No matter how things turn out for Uber, ride sharing is here to stay, and self-driving cars are the future.

Greg Serandos is a technology marketing strategist based in Johannesburg and San Francisco.When Uber later officially launched their testing using Volvo SUVs in San Francisco in December, they ignored an order from the State of California to cease operations. Subsequently Uber was forced to remove these vehicles from the road after repeatedly running through red lights. (Uber blamed and fired the human companions to the vehicles, incorrectly as it turned out.) As captured in this article in Fortune magazine:

Worse still, the apparently flawed system was deployed against explicit demands by California state regulators that they cease operations. Uber argued that the rules simply didn’t apply to them.

So while self-driving innovations push forward at a remarkable pace by the likes of Google, who has been testing self-driving in Silicon Valley for years, Tesla, and most major automakers, Uber finds itself in a serious predicament. Why? Because Google is suing Uber for theft of its autonomous driving technology.

Uber is facing an existential crisis. But before I get into that, it is as useful as it is entertaining to recap the legal challenge Uber is facing. Google has an autonomous driving subsidiary called Waymo. Anthony Levandowski, one of the original engineers on Google’s self-driving team, left to start Otto, which was acquired by Google for an estimated $680m last year. The trouble is that Levandowski is accused of stealing the Waymo technology, dubbed lindar, to start Otto, which is now owned by Uber. The details in this Wired article are worth reading.

It’s too early to know how this is going the play out. But we do know that the US courts have the authority issue a temporary injunction against Uber’s entire self-driving car program until the case moves through the courts.

Even a short one-year delay would put Uber’s entire self-driving program in jeopardy as competitors pass it by. If the courts award Google permanent injunctive relief, Uber would have to start from scratch, find another independent platform to acquire, or be ordered to pay a fee to Google every time you take an Uber. Any of these outcomes would be detrimental to Uber.

This reason this is important is that Uber’s mission is to make it cheaper to Uber around than to own a car. I recently moved to Johannesburg, South Africa, I can assure you that this isn’t the case at the moment. I spent $670 in February on Uber, and more in January. I am car shopping now.

Self-driving Ubers are the key to reduce the cost of ride sharing. As Uber CEO Travis Kalanick

told Business Insider last year: “So if that’s happening, what would happen if we weren’t a part of that future? If we weren’t part of the autonomy thing? Then the future passes us by basically, in a very expeditious and efficient way.”

He’s right. The magic of Uber is in the brilliant ride-sharing business model, not its technology. I love riding Uber, but ride-sharing apps are easy to develop these days. When Austin, Texas required Uber to conduct fingerprint-based background checks of their drivers, among other things, Uber and their US competitor Lyft left town. Almost immediately, no fewer than 6 apps sprung up, including the non-profit RideAustin. Ride sharing is alive and well in Austin, Texas and many cities around the world where Uber doesn’t operate.

In Johannesburg, Safari Cabs is Uber’s main competitor. Shesha offers Tuk Tuk rides throughout Sandton, which are a little more expensive but a lot more fun than Ubers. Both have apps. The point is that ride sharing apps are quick easy to build using existing technology that Uber didn’t invent; smartphones, navigation systems, and online payment processing.

Uber is the undisputed king of the Unicorns, the Silicon Valley term for privately held start-ups that reach a $1 billion valuation. Uber’s most recent founding round valued it at $62.5 billion, although Bloomberg has recently estimated it’s value to be less than half of that, $28 billion.

It is still early days of this legal battle, so we have no idea how it will turn out. If legal proceedings go against Uber, it would present a serious challenge to their future. By the end of 2017, Uber could fall to a $1bn company. Or they could IPO at a value of $62bn, or higher. We just don’t know.

For us commuters, however, it doesn’t matter. No matter how things turn out for Uber, ride sharing is here to stay, and self-driving cars are the future.

Greg Serandos is a technology marketing strategist based in Johannesburg and San Francisco.