Uber Class Action: A Catalyst For Innovation

California Uber drivers filed a class action lawsuit against the company and the case is heading to trial. As both a legal geek and a startup junkie, the Uber case fascinates me because it’s a wolf in sheep’s clothing. As an attorney, I fully recognize how the case could be seen as a defining point for the 1099 economy and its future. However, as a former startup founder, I see that many are missing possibly the most important point — that the outcome of the Uber lawsuit doesn’t matter nearly as much as the reality that “software is eating the world.” Case in point: The fact that Uber drivers actually filed suit against the company won’t lead to a win for the drivers, rather it will only hasten the pace at which Uber will work to replace its human drivers with software that powers self-driving cars.

While some startups replace industry leaders or create entirely novel industries, many make a living out of creating a more efficient and quality-driven marketplace for providers and consumers to interact within. Many people perceive Uber as an affordable, convenient, and easy way to get from point A to point B in a crowded city. Others look at Uber as a nicer, friendlier and better-smelling taxicab experience. While true, these perceptions miss a critical point: Uber is a software company that created a marketplace to connect drivers and riders. Uber is not a taxicab company. In fact, I’m pretty sure Uber doesn’t even own a single vehicle!

Uber and other marketplace-creating startups should be recognized for what they really are: producers of software that connects providers and consumers. In order to succeed in disrupting the taxicab industry that most people already loathed, Uber needed a marketplace based on quality and efficiency. And Uber has done just that by creating and utilizing a rating system actually matters. An Uber driver with a rating below 4 stars… HA! You’d be much more likely to find a unicorn that farts rainbows. The reason for this is that Uber will not let bad drivers to continue operating within its marketplace.

Uber software has facilitated a marketplace that is destroying the taxicab industry. In other words, Uber has created software that is eating the world. The class action lawsuit against Uber will only act as a catalyst for software’s continued consumption of the world, as the lawsuit only further incentivizes Uber to replace its drivers with software. And if Elon Musk is right (something that I’d never personally bet against) Uber drivers could be only two years away from being replaced by software. While the Uber lawsuit may have a defining role on the 1099 economy, it’s more likely that the case will be far more impactful on the taxicab industry and, possibly, the market for driving cars altogether.