The Inconvenient Truths Uber’s CEO Doesn’t Want You To Know

Uber CEO Dara Khosrowshahi

Although Uber doesn’t like to talk about it, times have been tough on both sides of its marketplace.

Any long-time patron of Uber’s ridesharing service knows that prices have skyrocketed in recent years. And most Uber drivers have found that not only has their ridesharing pay not kept up with inflation, but it has declined substantially over the past two years, Nonetheless, Uber has gone to considerable lengths to obscure these inconvenient truths, while continuing to tout the company’s commitment to transparency.

Inconvenient Truths
Late last year, I wrote an article for forbes.com highlighting the disconnects between what Uber is willing to acknowledge about its business practices and the everyday experience of riders and drivers. Three key findings emerged, based on an analysis of two large-scale databases capturing prices and driver pay records on millions of Uber trips.

1. Under CEO Dara Khosrowshahi’s leadership, Uber has sharply raised US rideshare prices far faster than the rate of inflation

While Khosrowshahi acknowledges that Uber’s prices have increased, he has suggested that Uber is just following general inflation trends, telling Wired’s Steven Levy, “Everything is more expensive. Inflation has become a part of our everyday life.”

But what Khosrowshahi didn’t say is that Uber began sharply raising the company’s US rideshare prices shortly after he joined the company as CEO in late 2017 when inflation was relatively low, and outpaced the CPI over the next four years, during which annual inflation averaged below 2%.

2. Since launching new business policies in the US in 2022, Uber’s driver pay has sharply declined

For most of its history, Uber guaranteed drivers a minimum base fare, following the century-old taxi pricing practice of calculating base pay on established per-mile and per-minute rates. But two years ago, Uber switched to a new pay model — Upfront Fares + Destination (UFD), giving Uber complete discretionary control over how its opaque algorithms determine driver pay. At about the same time, Uber also introduced “Trip Radar,” an online auction scheme, in which multiple drivers vie in a race to the bottom to accept low pay offers. Uber’s former practice of guaranteeing minimum driver pay for every trip was thus replaced by a policy where Uber now only has to pay the minimum any driver will accept for each trip.

This policy shift has proven to be highly effective in reducing driver earnings — by far, Uber’s biggest factor cost — given two additional factors decidedly in Uber’s favor:

1. Artificial intelligence
Given its market dominance, Uber knows more about customer and driver behavior than any other company, and thus is in the best position to utilize sophisticated AI technology to exploit price discrimination on both sides of its marketplace. In essence, Uber’s asymmetric information advantage gives the company the flexibility and ability to maximize its profit margin ­– the difference between rider price and driver pay (commonly called take rate) on every trip.

2. Robust driver supply
The financial hardship of a growing precariat labor pool, boosted by elevated immigration, has fueled strong supply growth and downward pressure on driver pay. A growing number of drivers find themselves trapped in what venture capitalist Albert Wenger describes as a vicious job loop, working ever harder to overcome their precarious financial condition, leaving no time to build new skills or search for employment offering higher or more reliable pay.

Gridwise, a gig worker data services company that tracks customer price and driver pay records on millions of rideshare and delivery trips, reported that Uber’s average monthly driver earnings in 2023 declined by 15% — 17% year-on-year — a uniquely steep pay cut compared to its gig company competitors Lyft, DoorDash, Instacart, and Grubhub.

Uber’s pay cuts are all the more notable, given that US employee wages grew considerably faster than inflation in 2023, while Uber’s pay cuts came despite even higher inflation in vehicle ownership and operating costs. In short, Uber’s recent changes in pay policies and business practices have been extremely harmful to drivers.

3. The combination of elevated prices and driver pay cuts enabled Uber to achieve a take rate of 40% in Q3 2023

To quantify just how potent Uber’s AI-driven algorithmic pricing and pay policies have been to the company’s bottom line, I estimated that Uber’s take rate –a term widely understood in the rideshare community to be the percent difference between rider price and driver pay — spiked to 40% by Q3 2023, an increase of over 4 percentage points year-on-year, boosting the company’s annual operating cash flow by billions of dollars at drivers’ expense.

Uber’s Response
My forbes.com article detailed my sources and methods, and invited Uber to correct any disputed facts. Uber responded by strenuously disputing my findings. In emails and phone calls, company spokespersons called my article “irresponsibly wrong,” adding that “Uber’s take rate is nowhere near 40%” and that “the fundamental premise of the piece, that Uber has achieved profitability by increasing the percentage of the total rider fare that it gets from drivers, is fundamentally false.”

Soon afterward, Uber’s Senior Vice President of Mobility and Business Operations, Andrew MacDonald weighed in, posting the following tweet.

MacDonald’s tweet linked to an Uber blog post, contesting my findings (without providing specific counterfactual data), and sidestepping my key finding on take rates by rejecting my definition of the term, as summarized below.

1. Uber’s Price Increases

Uber’s blog stated: “Yes, prices have gone up significantly over the last few years. Uber is an open marketplace, which means that prices tend to reflect broader economic conditions as well as the balance of supply and demand for rides.” However the company did not provide any data on its US rideshare pricing trends or comment on my finding that Uber’s price hikes significantly outpaced CPI growth during the first four years of Khosrowshahi’s leadership, and have remained relatively high since.

2. Uber’s Driver Pay Cuts

In my article, I specifically focused on Uber’s driver pay cuts following the company’s launch of new driver pay policies, i.e., the period from Q1 2022 through Q3 2023. Yet Uber’s rebuttal only asked and answered a contextually irrelevant question:

“But didn’t Uber cut driver pay? No. In the US, median driver earnings per utilized hour, including tips and incentives, have grown nearly 30% over the last six years, faster than inflation.”

Uber’s commentary ignored the figure it included in its blog post confirming my finding that US driver pay declined significantly between 2022 and 2023 (my emphasis added below).

3. Uber’s Take Rates
Uber’s blog presented an accounting explanation of why the widely understood and used meaning of take rate ­– the percent difference between rider price and driver pay– is inappropriate. To the confusion of many readers (including myself), Uber argued that “if you were to subtract out all of [our] insurance costs from Uber’s US Mobility Revenue, you would be left with well under 20% of the total fare.

In essence, Uber was saying, the company is only willing to talk about “take rates” after deducting its insurance costs and other pass-throught and booking fees. But the inconvenient truth is, drivers too are experiencing sharply rising insurance and maintenance costs, but are being left with a smaller slice of the pie to deal with them.

Here’s how one of Uber’s best-earning drivers in Massachusetts responded to Andrew MacDonald’s redefinition of take rates.

Another response came from Harry Campbell, owner and founder of The Rideshare Guy, a media company followed by hundreds of thousands of gig work drivers.

Will Coleman, a former McKinsey transportation industry partner and current CEO of a competing ridehail company echoed drivers’ sentiments.

When asked for additional comments and data to strengthen their prior response to my research findings, an Uber spokesperson said:

“We’ve said again and again, that local governments have increasingly taxed rideshare trips and the cost of auto insurance has risen dramatically in recent years. Uber’s global Mobility take rate remains flat — and as included in our earnings report on Tuesday, is 23.4%, down from 23.7% in Q1. I recognize you’d like us to break out that number just for the US, but that’s not how we report our financials.”

For the record, Uber no longer refers to “Take Rates” in its earnings reports, having changed the term previously used to “Revenue Margin” starting in Q3 2023. Uber’s reported global mobility revenue margin of 23.4% for Q2 2024 (adjusted for accounting changes across in several countries outside the US), was more than 2 percentage points higher than the prior year. Uber has also previously acknowledged that its US take rate is higher US than its global average.

Protecting Uber’s Source of Newfound Profitability
It’s not a coincidence that Uber’s cash flow jumped in 2023 (and again in the first two quarters of 2024), after Uber had fully implemented recent pricing and driver pay policies. Uber’s success is critically dependent on exploiting its asymmetric information advantage over riders and drivers, as Mr. Khosrowshahi explained in an interview with Kara Swisher in October 2023:

“We use AI when you get quoted a price for an Uber, when a driver gets an offer for a particular ride, when we route you, when you open up Uber Eats. All of it is powered by AI. So AI is intermingled and every single part of our service at this point and these algorithms are superior to the technology that we had 5 to 10 years ago because they learn a skill in a personalized way. It’s pretty powerful tech out there.”

And during Uber’s Q4 2023 earnings call, in February 2024, when asked specifically about Uber’s “upfront fares,” Mr Khosrowshahi again said the quiet part out loud about the company’s ability to maximize its take rate on every trip:

“I think what we can do better is targeting different trips to different drivers based on their preferences, or based on behavioral patterns that they are showing us. That is really the focus going forward: Offering the right trip, at the right price to the right driver.”

Uber’s financially savvy, ex-investment banker CEO is undoubtedly aware of the company’s profit drivers, but is understandably reluctant to openly discuss the strategic leverage his company wields, namely the extent to which high sustained rider prices and substantial driver pay cuts have generated billions of dollars of additional operating cash flow.

This may explain why Uber pushed back so hard on the findings in my December 2023 forbes.com article, and reflective of a broader pattern of non-transparency about its US ridesharing operations.

1. Carefully crafting what data the company is willing to disclose in its largest country market, making it difficult to assess even the most basic measures of Uber’s operations and financial performance (e.g. number of trips, price and driver pay trends, rider wait times, and driver utilization and acceptance rates).
2. …Except for selective talking points that the CEO shares in podcast appearances and quarterly earnings calls, designed to show the company in the best possible light (e.g. US average driver earnings of $33 per active hour, reported US take rates of 15%).
3. Changing the definitions of commonly used metrics, most notably take rates, which Uber now calculates only after excluding opaque commercial insurance expenses and booking fees.
4. Threatening to suspend operations in cities proposing to require additional information disclosure.
5. Repeatedly dismissing the validity of independent studies of company operations that of necessity must rely on third-party data sources, but without providing specific counter-factual evidence.
6. Actively blocking third-party apps from offering consumers and drivers valued information on competitive ridehail prices and pay rates, thwarting attempts to help level the playing field against Uber’s asymmetric information advantages.

Anti-Competitive Terms Of Service
The last point warrants the attention of government regulators concerned with preventing dominant market leaders from exercising anti-competitive market power. Let’s start by examining how Uber has sought to limit consumer access to information on competitive pricing in the ridehail sector.

Consumers have always complained about Uber’s surge pricing practices, and that concern has only grown in recent years. When Uber first started, the company was open and transparent about the rationale for its pricing policies, setting fares at a base level determined by published per-mile and per-minute rates in each city, possibly adjusted by a surge multiple (e.g. 1.5x), reflecting temporary supply-demand imbalances. Consumers and drivers were explicitly shown applicable surge multipliers on Uber’s app on each trip offer.

Uber’s stated policy was to use surge pricing to dynamically balance supply and demand, returning fares to normal base levels as quickly and often as possible. Consumers may not have liked the impacts of temporary price spikes, but at least Uber’s rationale and marketplace logic were clear and sound.

Starting in 2016 however, Uber shifted to an “upfront pricing” policy whereby consumers ordering a ride were simply presented a price, determined by an opaque algorithm, dropping any reference to base fares or surge multiples. Uber’s pricing policies thus became less transparent, often varying widely from trip to trip, contributing to an erosion of consumer trust.

A survey of over 1,700 rideshare consumers conducted in May, 2024 by Obi, a rideshare data services company, found that the high price of rides is the number one reason consumers don’t use rideshare more, and 48% say it’s their biggest frustration. Ride fare transparency also ranked highly, showing a clear appetite by consumers for more transparency on how much drivers earn, vs ride providers and taxes.

Consumers who take the trouble to compare prices between Uber, Lyft and other ridehail providers often find a significant difference. For example, in a research project I conducted in 2019 comparing 10,000 identical trips (precisely the same origin, destination, and time of day) in the four largest US rideshare markets, Uber and Lyft’s prices differed by more than 16% on over half the trips, and by more than 25% on one-third of the trips.

Obi, a startup launched in 2017, recognized the need and opportunity to provide a price comparison tool to rideshare customers, comparable to how Expedia and Google Flights operate in the airline sector. Consumers who are willing to share their rideshare login credentials with Obi get free, real-time price and travel time comparisons from competing rideshare services.

Obi’s app opens by asking users, “where do you want to go?” After entering a destination address, Obi immediately returns the prices and travel times for competing services, ranked from best to worst. In this example, for a rideshare trip I recently requested in New York, there was a considerable price difference between competing services.

As the dominant US rideshare provider, with three times the market share of its closest rival, Uber opposes apps providing price transparency to consumers. In fact, Uber has been threatening Obi’s subscribers with deactivation from Uber’s app as noted in an email I recently received from Uber shortly after using Obi’s price comparison tool.

While Uber’s Terms of Use do prohibit users from sharing login credentials with third parties, Obi does not share personalized trip request information with other companies or organizations, encrypts transaction data in transit, and allows users to request their data to be deleted from Obi’s servers.

As a point of contrast from Obi’s experience, Southwest Airlines, the largest US domestic air carrier, which had previously blocked price comparison apps from listing its flights, now allows Google Flights to list its flights alongside competing airlines.

My experience (along with thousands of other Obi users who have received similar deactivation warnings from Uber) warrants regulatory review. The question is, should a market leader like Uber be allowed to establish terms of use under the guise of “security” that may be as harmful to consumers and competitors as they are helpful to the market leader?

For example, Amazon has faced legal scrutiny over a “Most Favored Nation” clause in its vendor terms that dictates how much retailers can charge for their products on other platforms, harming competitors and raising consumer prices. And Apple has faced regulatory scrutiny over its app store terms of service that sharply constrain competing app developers’ business operations, payment service choice, and profitability, while raising consumer prices.

Uber has also flexed its market power to restrict third-party apps from providing valued information to rideshare and delivery drivers. To understand the marketplace need for driver support services, consider the stressful working conditions that drivers face on the job.

In most cities, for each trip offered on Uber’s app, drivers are shown the rider’s destination, pay amount, and the predicted trip time and distance, including to the pickup point. So far so good. But drivers have only seconds to respond, with the fear that if they refuse too many offers, Uber’s AI algorithms will put them in a “penalty box” of unknown duration, ghosted from receiving additional offers or, as Uber is now piloting in three states, receiving even worse offers going forward. As previously noted, multiple drivers are also often offered the same trip in real-time “Trip Radar” auctions, pitting Uber drivers against each other.

While juggling these split-second decisions on which trips to accept, drivers are also expected to drive safely, and to provide professional, courteous customer service, even when dealing with passengers who often cancel trips, aren’t ready for pickup, or who may be drunk, underage, abusive, or not who the app claims them to be.

And woe betide drivers who receive a low rating or complaint from a passenger, for legitimate reasons or otherwise (e.g., asking a passenger not to vape in their vehicle or having a child seat available for their toddler). A recent survey of over 800 Uber and Lyft drivers in California found that two-thirds have been deactivated at least once, and one-third never received an explanation of the reason for their dismissal.

To help drivers operate more safely and profitably, several third-party apps (e.g., Maxymo, Para, GigU and others) have emerged, offering valuable features and functions. As independent contractors, drivers value decision-support help to effectively control the types of trips they accept. To see how these apps work, consider the information a driver sees on Uber’s driver app when a trip offer comes in.

While at first glance, this trip appears to offer attractive pay, there’s a lot of information a driver must consider before accepting: How long and how many miles will be required to pick up and drive the rider to the destination? What is the implied pay rate per-hour and per-mile? How likely will a revenue-generating return trip be available? What is the rider’s behavioral rating? That’s a lot to process in the few seconds Uber allows drivers to make a decision. And that’s the problem driver support apps are designed to solve.

Take GigU, for example, a Brazilian-based company that soon plans to enter the US market. Founded in 2017 (under the name StopClub), it soon became Brazil’s largest gig worker community, serving over 220,000 active users, particularly in São Paulo, Uber’s fifth largest ridehail market in the world.

For starters, GigU app enables drivers to set personalized work preferences, e.g. the minimum desired pay per hour or mile, and allows drivers to permit the app to automatically make trip acceptance decisions. Another popular feature is a schedule planning tool that allows drivers to estimate how many hours they will have to work to reach a desired gross and net earnings level per shift.

While driving, GigU shows drivers the attractiveness of each incoming Uber trip offer, color-coded according to pre-defined driver preferences. In the example shown below, Uber’s highest-paying trip yields the lowest and least attractive rate on a per-mile basis, according to this driver’s preferences. In addition to real-time decision support, GigU also offers driver security features, such as audio and video recordings to document risky ride situations, and audio chat features to share location information with fellow drivers or family members.

Despite, or perhaps because of their popularity, Uber has sought to constrain the functionality provided by third-party driver support apps. For example, last year, Uber filed a lawsuit in Brazil seeking an injunction to suspend GigU’s operations that was denied by the courts. In the US, in April of this year, Uber began disabling some of Maxymo’s driver support functions by putting blockers directly in their app to prevent Maxymo from allowing drivers to automate going offline while driving a rideshare competitor’s customer, or from automatically declining trips that fall below a driver’s preferred earning thresholds. Maxymo has continued to operate, but with reduced functionality. Another US driver support app, Para, experienced similar technical blocks limiting its functionality, and ultimately decided to suspend its US operations.

Third-party apps like Maxymo and GigU gain access to driver data by using built-in functions directly on drivers’ Android mobile devices, meaning they don’t need to access Uber’s servers, APIs, or Uber login credentials. The displayed data are only available within the app and are not shared outside a driver’s phone. Drivers are explicitly asked to allow each decision-support function, giving drivers total control over how they choose to operate as independent contractors. In contrast, Uber recently forced its drivers to change their personal phone settings permitting Uber to override the display of any other app a driver may be using (be it a competitor’s rideshare app, texting family members or anything else).

The bottom line is, to protect its dominant US market position, there’s a lot of information that Uber doesn’t want its stakeholders to know. At the aggregate business level, Uber does not want the public, investors, or federal, state, and local regulatory agencies to know key operating metrics about its largest global market. Information on Uber’s total number of trips, average price and pay trends, and commissions (aka take rates) are off the table, as are the impact of these metrics on Uber’s profitability. And for the millions of trips customers take every day, Uber doesn’t want or allow its riders to easily access competitive prices, or its drivers to use decision support tools that help evaluate pay rates. Uber has and uses its market power to keep things the way they are.

When asked about third-party apps, an Uber spokesperson said “When unauthorized third-party apps require drivers to provide access to their Uber account or share credentials, such as their username and password, it poses security risks for users and violates Uber’s Community Guidelines.”

View From The Driver’s Seat
Uber is certainly not alone in limiting the information publicly traded companies disclose about their operations. Over the years, Amazon, Apple, Google and others have also been criticized on similar grounds. For example, Amazon launched its cloud services business in 2006, but took ten years before it was willing to release any data on the scale and profitability of AWS, Amazon’s most profitable business unit. What does make Uber unique however is its CEO’s repeated claims about his company’s full transparency.

For example, here’s how Dara Khosrowshahi explained his philosophy on corporate transparency in late 2019 at the Economic Club of New York: “We have to be transparent with our stakeholders and society… I think trust first comes with transparency. As a company, we are being much more transparent. And I think there’s a demand of society for companies that, especially digital companies that I think in the past had kind of a data advantage, to be transparent and put their data out there.”

The following year, Khosrowshahi penned an op-ed for the New York Times provocatively titled: “I Am The C.E.O. Of Uber: Gig Workers Deserve Better,” pledging “we have to be more transparent about what drivers make and the realities of the work.” Yet, three years later, based on my research, and discussions with hundreds of drivers, under Mr. Khosrowshahi’s watch, drivers have become increasingly disadvantaged by Uber’s opaque AI-driven pay-setting algorithms, working harder and earning less, despite soaring auto ownership and operating costs.

When I asked a number of veteran drivers what they would suggest if given the opportunity to talk directly to Uber’s CEO, here’s a sampling of their responses.

Pablo Gomez — Uber driver experience: 3.5 years
“I’ve been driving for Uber for 3.5 years, but I’m not driving much for them lately. I mostly do Lyft. I work mostly from LA airports, and about three months ago, Uber really slashed their pay. Looking back, Uber’s pay was really good as the economy came out of the pandemic in 2021 and 2022, but within a couple of months of upfront fares coming in, you could see that’s when they took control and slashed their pay. In the old days, Uber’s pay was more predictable. I used to be able to do pretty good, knowing where to be when, to make good money. With upfront fares, I feel like I can’t beat the machines. It’s like playing the slots in Vegas. The house always wins. It’s a trap and I’m losing the game. I’m not making anywhere near what I used to make.

If I could talk to Dara [Khosrowshahi], I’d suggest three things: Transparency, Consistency, and Simple Arithmetic. The way that things are now, there’s no rhyme or reason. The opaqueness of their whole system lends itself to a lot of funny business.

Before, if a ride was a hundred dollars and then Uber was taking, let’s say, $ 30 or $40 of that $100. Now it’s $100 and I see rides where Uber is taking $60. Mr. Khosrowshahi, don’t come and tell me that you’re not making money on that $100 because your insurance rates went up. So have mine!

In the old days, VCs were subsidizing low passenger fares. Now we’re the sub. We the drivers are subsidizing what Uber is giving to the rider. It’s the driver who is keeping rider prices artificially low. Uber is not sharing their wealth with drivers because they don’t have to. Now, there’s a black box algorithm that just gets to price whatever they want, based on your habits, and I’m competing with people who are desperate, and who are doing any rides, and that just keeps suppressing driver pay.”

Kyle Kessenich — Uber driver experience: 2.5 years
“I recently left Uber for Lyft because of the complete lack of value Mr. Khowrowshahi shows towards his drivers. He needs to put more emphasis on the lifeblood of Uber and show more appreciation for experienced drivers, instead of constantly putting drivers in a position of racing to the bottom. Uber’s policies are pushing out his best and most experienced drivers, particularly those like me who drive full-time in a relatively new Tesla. Instead, he’s constantly bringing in new drivers in beater cars that degrade Uber’s customer service. I also recommend that Uber be more transparent with its pay and don’t do all this ‘Uber math,’ playing games with different drivers getting different pay rates and bonuses all the time. I’m definitely a proponent of going back to a rate card.”

Sean Celik — Uber driver experience: 2 years
“I started driving just as upfront fares were coming in, and fares were pretty good. I was making some pretty decent money, with bonuses. As a business owner, I didn’t expect bonuses, quests, and everything else to be going on for too long. but I didn’t expect it to completely go away.

In, 2023, I remember, vividly, actually, around the November of 2023 when I stopped getting any type of quest or any type of bonuses and I also noticed the upfront fares started to drop tremendously. I remember thinking, there’s no way I’m getting $6 offers, for 20-minute rides; I thought it was just for the day. But the next day I go on and it’s the same thing — upfront fares were no longer favorable for the driver. That’s when I realized something is definitely going on here, and it’s not right.

I worked in corporate America for a long time. There was always an explanation or reasoning behind what my company would do and why when I worked at T-Mobile. They say, ‘okay, we gotta make these types of cuts and we have to push this type of product. And this is the reason why,’ right?

I understand making or earning money from Uber is different: I’m not directly employed by them. However, this gaslighting campaign that they started: ‘Oh, our drivers love it! You know they’re making $32 an hour on average’. I was listening to it, and going ‘come on, man.’ And it’s not like we can call somebody up and go. ‘Hey, where’s my $32 an hour?’

It’s the old churn and burn so they don’t mind losing drivers. Yeah, I mean, if I was running a business, I too would want as many people as possible. But the churn part of it is people not staying because they don’t believe in the company anymore. But the company doesn’t care about that. They only care about the shareholder aspect of it. And it takes a while for new drivers to figure out Uber’s games.

The part that I don’t understand is their lack of transparency. Instead of trying to let us know: ‘Hey, guys, you are human. We understand you. We hear you. This is what is going to be coming up.’

It doesn’t affect my pocket as much as it does for full-time drivers who drive 70 to 80 hours a week. I talk to some of these drivers, and my heart goes out. You know some of them sleep in their car. They still believe in Uber, because they believe that the good times are going to come, but they keep falling into this mouse trap.

Uber and Lyft. are wonderful services. But again it goes back to the human side of it…how do your drivers really feel when they’re doing this? If I had the chance to talk to Dara Khosrowshahi, I would be very straight up with him and ask why he isn’t being honest with his drivers. Why is it that he gives a different type of message to the shareholders and the news media outlets than he does to the drivers?

But I know he’s afraid of these types of questions. That’s why he will not have a town hall. or some type of get-together with drivers who’ve been driving for a while, the ones who would love answers because he should want me to create a good perception of Uber. What they have now is not sustainable.”

Trust Requires Transparency
Uber has lost the trust of its experienced drivers. The sentiments expressed above are echoed by hundreds of other drivers I’ve interacted with over the past couple of years.

When asked to share feedback on Uber’s efforts to monitor driver sentiment, a spokesperson replied:

“We cannot share confidential Uber data with you just because you’re writing a blog post, and that includes raw survey data from our drivers… But we will emphasize again that we continually conduct large-scale driver surveys. We randomly survey US drivers directly in the app as well as conducting blind surveys through a third party, resulting in thousands of responses around sentiment every single day. Also, as we’ve shared, looking at a combined view of this data over the last 2 years, driver satisfaction and favorability have remained positive and stable; they of course fluctuate, but there have been no persistent or recent declines, as you assert based on the small and non-representative sample of drivers that you’ve spoken with.”

On any given day, Reddit, X (née Twitter), and YouTube are filled with posts from drivers sharing screenshots of low-paying ride offers, often accompanied by indignant commentary too colorful to share here. Organized driver groups have formed around the country serving as forums for local grievances, in many cases supported by political action groups lobbying for gig work regulations. To capture and amplify this zeitgeist, numerous podcasts and videocasts have emerged, highlighting declining pay and work rules that violate their status as independent contractors, along with tips on how to make the best of an ever-more challenging business.

But sadly, Uber’s CEO and a growing number of his company’s drivers appear to be talking past each other.

It doesn’t have to be this way. Flourishing companies in industries that Uber cited as worker pay comparables in its 2019 IPO prospectus (retail, wholesale, restaurant services, and other similar work) have a distinctly longer-term perspective on the strategic value of customer-facing employees. Take the US retail sector. The two most successful US grocery retailers over the long term have been Costco (3X greater shareholder value growth over the past five years than Walmart or Kroger) and privately owned Trader Joe’s (4X higher sales per square foot than Walmart or Kroger). Sure, there are differences in the cost structure and business models of grocers and rideshare companies. But both industries operate in fiercely competitive sectors, with thin margins and significant customer-worker interactions (arguably even more important in the ridehail industry).

Nonetheless, from the beginning, Costco’s and Trader Joe’s founders recognized the importance of front-line workers to their company’s long-term success. Here’s what Trader Joe’s founder Joe Coulombe had to say:

“You can’t afford to have cheap employees. Time and again I am asked why no one has successfully replicated Trader Joe’s. The answer is that no one has been willing to pay the wages and benefits, and thereby attract — and keep — the quality of people who work at Trader Joe’s.”

Costco founder Jim Sinegal echoed similar sentiments.

“Paying your employees well is not only the right thing to do but it makes for good business. It doesn’t do much good to have a quality image, whether it’s with the facility or whether it’s with the merchandise, if you don’t have real quality people taking care of your customers.”

The founders/CEOs of Costco and Trader Joe’s were as highly regarded by investors as by front-line workers, who they often met during unannounced store visits. By executing highly differentiated strategies, supported by strong business models, and equitably sharing company profits with all stakeholders, these CEOs positioned their companies for enduring success.

In contrast, Uber’s strategy has yielded substantial short-term shareholder returns –150% in 2023 — at the expense of its US drivers, who suffered a double-digit earnings decline in 2023, and aren’t faring much better this year.

Mr. Khosrowshahi’s public appearances mirror the company’s prioritization of shareholders over workers. While Uber’s CEO maintains an active presence at investor forums and business-oriented podcasts, you won’t find him interacting with drivers at organized or impromptu meetings or accepting invitations for podcast interviews hosted by and aimed at Uber’s driver’s community.

Companies that alienate their front-line workers, particularly in services businesses, rarely do well over the long term. Adverse consequences include higher turnover, reduced productivity, and degraded service quality, leading to lower customer satisfaction and loyalty. These conditions in turn often invite new competition and regulatory oversight, as we’ve already seen in Uber’s rideshare and delivery businesses. Minnesota and Massachusetts recently joined New York, Washington and California in reaching agreements with Uber and Lyft to guarantee drivers minimum pay rates and additional benefits.

Perhaps no one has studied the relationship between worker engagement and long-term corporate success more than Fred Reichheld, a Bain Fellow, creator of the Net Promoter Score system and author of “Winning on Purpose — The Unbeatable Strategy of Loving Customers.” In his four decades of advising corporate clients on long-term growth strategies, Reichheld has written:

“If you wonder what getting and keeping the right [workers] has to do with getting and keeping the right customers, the answer is everything. Without trust, there can be no loyalty — and without loyalty, there can be no true growth.”

And…

“Too many companies these days can’t tell the difference between good profits and bad…. You’re probably wondering how in heaven’s name profit, that holy grail of the business enterprise, can ever be bad. Short of outright fraud, isn’t one dollar of earnings as good as another? Certainly, accountants can’t tell the difference between good and bad profits. They all look the same on an income statement. While bad profits don’t show up on the books, they are easy to recognize. They’re profits earned at the expense of customer relationships.”

The ball is in Uber CEO Dara Khosrowshahi’s court. He said the right thing in headlining his 2020 New York Times op-ed: “I Am the C.E.O. of Uber. Gig Workers Deserve Better.” It’s time to take actions that match these words. Here are some suggestions that would better serve all of Uber’s stakeholders over the long term.

· Establish more open and responsive channels of communication with Uber’s driver community, including regular comprehensive surveys of driver satisfaction to monitor the impacts of company policies, town halls, and improved dealer support services. Too many drivers do not currently feel heard, valued, or respected.

· Relatedly, be more transparent and honest in communicating how Uber’s business practices impact all company stakeholders. Uber’s CEO can’t just declare “perfect transparency,” he has to earn it. The driver quotes included in this article reflect the growing dissatisfaction of a large segment of Uber drivers who perceive that Uber is not being straight with them. It is Uber’s responsibility to understand and address current sources of misunderstandings, distrust, and demoralization.

· Reinstate minimum $/mile and $/minute pay rates, providing adequate pay per working hour. As recently legislated in Washington and Minnesota, rate minimums can be higher in populous metro areas and lower elsewhere. But in any case, Uber should eliminate predatory pay offers that barely or don’t even cover a driver’s vehicle operating costs, financially harming drivers and tarnishing Uber’s reputation.

Uber doesn’t have to wait for state or national regulation to enact pay rate minimums nationwide. Rate cards have been a hallmark of Uber’s corporate policy for all but the last two years. There will undoubtedly be a vigorous debate over what “fair” minimum pay rates should be, but there should be no debate over the need for acceptable minimums that take driver utilization and vehicle operating expenses into account. Uber can and should continue to use dynamic pricing to manage supply/demand imbalances and retain the right to earn as high a take rate as the market will bear. But Uber will not regain the trust of drivers as long as there is no pay rate floor which currently enables the company to boost profits by cutting driver pay.

· Accelerate collaborative efforts with government agencies seeking to improve other aspects of driver work conditions. Uber’s own past surveys have highlighted the areas of greatest driver concern including safety, sick pay, deactivation protections, improved support services, and faster dispute resolution.

· Recognize that Uber will predominantly rely on drivers to transport people and goods for the meaningful future. As Mr. Khosrowshahi acknowledged earlier this month during Uber’s Q2 2024 earnings call, “autonomous vehicles are not something that we’re going to look to make substantial profits from over the next five to 10 years.” Rather, Uber’s nearly 7.5 million drivers worldwide — more than three times the number of employees at McDonalds or Walmart — will continue to serve as the backbone of the company’s business. So the well-being, satisfaction, engagement, productivity, and retention of Uber’s massive workforce is critical to the company’s success. But you’d never know it from the company’s commentary during Uber’s most recent earnings call, during which Mr. Khosrowshahi said: “on the mobility side, more driver supply brings down prices for riders and improves reliability,” and “as driver supply improves, surge comes down, ETAs improve, the service itself becomes more compelling.” These comments signal Uber’s overwhelming bias toward improving its rider value proposition over driver earnings. After all, how would more driver supply bring down rider prices, if not by cutting driver pay? And if increased supply makes Uber’s service more compelling for riders, what about the value proposition for drivers? Uber’s CEO seems to be suggesting a limitless, fungible supply of drivers, regardless of the pay the company offers. But this assumption is illogical and unsustainable, as is already likely evident in declining US driver acceptance rates and increasing rider wait times — two metrics (among many others) that the company will not disclose.

In conclusion, Uber’s recent profit improvement puts Dara Khosrowshahi in the pantheon of greatest CEO turnarounds of all time (e.g., in the good company of Steve Jobs at Apple and Reid Hastings at Netflix). Along the way, Uber’s CEO has often praised the efforts of his Marketplace group that develops the company’s AI pricing and pay algorithms. But while Uber’s Marketplace wizards have effectively exploited the financial hardship of a growing precariat workforce, enabling Uber to algorithmically optimize driver pay cuts, Khosrowshahi shouldn’t forget the contributions, value, and dignity of Uber’s human workforce, without whom the company couldn’t deliver people and goods to enrich the company and its CEO.

An Uber spokesperson agreed with this sentiment, commenting:

“We, more than anyone, appreciate the importance of drivers on our platform. We know that we can’t be successful unless they are and, while we may not always get it right, we are committed to continuing to work toward a better driver experience. We’re proud that millions of people find flexible work on our platform, but that won’t stop us from always working to be better.”

Let’s hope Uber’s deeds match their words going forward. Gig workers deserve better.