The most telling sentence in the Wall Street Journal’s feature story on Uber’s CEO Dara Khosrowshahi occasionally driving for his own company is the first one. It says that, “After five years running Uber, Dara Khosrowshahi in September got behind the wheel himself.”
The context of the story is that Uber has battled a driver and delivery worker shortage for years. It has struggled to square the circle on how to provide these services at a low enough price that people will be willing to pay for it but also pay its workers well enough so they keep doing it, all while financing a very expensive corporate operation that, for most of the company’s history, involved billions of dollars in losses trying to develop self-driving cars and other moonshots that went nowhere.
Simultaneously, Uber has had to balance what the WSJ calls “legal risks,” a euphemism for the high-profile and expensive fight over whether drivers should be classified as Uber employees or independent contractors. Uber led the fight by gig economy companies which spent in total more than $224 million to win Prop 22 in California, nullifying a state law that would have classified Uber’s drivers as employees because they have little control over their pay or work, which is guided by company algorithms. Prop 22 passed, ensuring drivers would continue to remain classified as independent contractors and Uber’s business model to remain viable. Uber won this fight in California and a subsequent court ruling in March mostly upheld its principles.
In order to make this legal argument that drivers are independent contractors, Uber and other gig economy companies have had to make a very strange argument: Their actual customers are not the riders who hail rides or the hungry people who order food through the app, but the drivers themselves. Uber said so in its own filing with the Securities and Exchange Commission for its initial public offering in 2019: “Because end-users access our platform for free and we have no performance obligation to end-users, end-users are not our customers.”
Which brings us back to the WSJ story. It is presented as a kind of Undercover Boss narrative. Khosrowshahi drove under the name “Dave K.” Khosrowshahi drove someone to the airport. Khosrowshahi drove someone to Oakland and got stuck in traffic. Khosrowshahi curates a Spotify playlist for his riders. Khosrowshahi forgot someone’s drink then blamed it on the app design (unlike a regular Uber driver, who merely gets slammed with a bad rating and zero tip, Khosrowshahi pinged an executive to change the app design). Khosrowshahi realized it actually sucks to not know how much you’re going to be paid before you accept a ride or where the ride will go, something Uber drivers have been complaining about since the app’s inception more than a decade ago, devising intricate theories for how to game the app to their favor, none of which are actually valid but provide an illusion of control the company only encourages.
Nothing about this is new. Back in 2015, then-Uber CEO Travis Kalanick told Stephen Colbert he drove an Uber and had a perfect five-star rating (for the record, Khosrowshahi claims to have one too). Lyft CEO John Zimmer also drove for the company on occasion. This phenomenon of CEOs getting down and dirty with the workers is nothing new or even interesting, a well-worn PR routine—if you have trouble spotting them, a good tell is when the publication sends a dedicated photographer along—dating back at least as long as Undercover Boss but never going out of style. A few weeks ago, Starbucks’ new CEO said he would pull some levers and push buttons to serve drinks amidst a national controversy over the company’s blatantly anti-union practices that saw former founder, CEO, and short-lived presidential candidate Howard Schultz hauled before Congress.
Nor are any of the issues, frustrations, or annoyances Khosrowshahi identified about being a driver new, particularly around the important stuff like driver pay. In 2019, I, along with my colleague Dhruv Mehrotra, investigated how much Uber and Lyft drivers were actually paid for each ride, data neither company publicly discloses. Using a dataset of more than 14,000 fares, we found Uber kept 35 percent of the revenue. Lyft kept 38 percent. Other studies found similar results. As with many other media stories over the years voicing the same frustrations Khosrowshahi found for himself, the company’s public relations team denied the veracity of our findings and quibbled with our methodology. But when we talked to drivers for the story, we heard many of the same complaints Khosrowshahi voiced to the WSJ.
Which is why the first sentence of the WSJ story is so telling. Khosrowshahi has been leading Uber for more than five years. The company’s public position has been, up to this point, that the drivers are its customers. But he never actually bothered to find out what the customer experience was like until now. What kind of CEO waits five years to find out what his own customers’ experience is like? A CEO who knows a legal fiction when he sees one and can finally drop the pretenses once it is cemented into law.
There is one other telling line from Khosrowshahi in the WSJ that bears mentioning. Back when Kalanick was on Colbert in 2015, he said the future of the company was robotaxis. “Google is doing driverless, Tesla is doing driverless, Apple is doing driverless," Kalanick said. "This is going to be the world. Do you want to be part of the future or do you want to resist the future?” Lyft’s co-founder John Zimmer echoed that in 2016, predicting a “majority” of Lyft rides would be driverless in 2021—actual percentage: zero—and, by 2025, “private car ownership will all-but end in major U.S. cities.”
This was the big bet, that the whole driver classification/customer issue would solve itself by getting rid of the driver. It reminds me of the summer of “production hell” Tesla underwent in 2018 trying to get the Model 3 off the assembly line because Elon Musk had tried to automate the entire factory only to find it didn’t work. Musk’s conclusion: “Humans are underrated.”
Or, as Khosrowshahi told the WSJ, “I think that the industry as a whole, to some extent, has taken drivers for granted.”