Uber 🤖 🚕 - UBER

They give away good free swag to software engineers, I’d give them 5 stars just for that.

Driver classification

There are new developments that are kind of important for Uber, Lyft and all the other gig-economy companies that have massive operations in the US.

These tech (or “tech”) companies made it convenient—and sometimes cheaper—for its users to get a taxi or have food delivered.

Remove the friction out of the equation.

On the other side of the transactions were the providers of services who got paid less than the market. Uber and others would incentivise drivers to fill the streets by paying them bonuses.

But we, as users, always got the better end of the deal.

Meanwhile, valuations of these startups ballooned. And also thank you SoftBank Vision Fund.

And if you have ever asked Uber drivers about bonuses from Uber, you have probably regretted asking them about Uber bonuses. They used to be higher and SoftBank and other investors may have paid for that form of ride subsidy.

This study from EPI says average pay of Uber drivers is USD 9.21 an hour:

The Uber driver W-2 equivalent hourly wage falls below the mandated minimum wage in the majority of major Uber urban markets

This revised study by MIT—as reported by Inc—says the medium pay is about USD 10 an hour.

Forty-one percent of drivers made less than their state’s minimum wage and 4 percent lost money.

If Uber or Lyft or who-else starts paying their drivers normal wages plus “unpaid fair wages”, what do you think will happen to General & Administrative or Operations & Support expenses (see below):

(from the S-1 filings)

Neither Uber nor Lyft were (are?) making an operating profit (as in, with a plus sign next to it) before you could even adjust it for weird items and depreciation/amortisation (to make it an “EBITDA” that analysts like talking about).

Lyft warned under Risk Factors in its S-1 pre-IPO filing what would happen to its business if it has to classify drivers as employees—monetary exposure, claims, claims, charges, other claims…:

Always read the Risk Factors section.


On Friday, California state senators on the appropriations committee voted for Assembly Bill 5 — a bill designed to improve the livelihood of gig economy workers at companies like Uber and Lyft, whose business models depend on independent contractors who often suffer inconsistent wages and little or no benefits.

The vote brings the bill one step closer to becoming a law, one which has the potential to completely remake California’s gig economy to make it more equitable for workers. Lawmakers voted 5-2 to send the bill to the Senate floor, which will be the final vote.

(Source — Salon)

In the S-1 filing pre-IPO, Uber warned that:

It will also fundamentally change Uber and Lyft. Uber phrases it this way: the bill would “drastically change the rideshare experience as you’ve come to know it, and would limit Uber’s ability to connect you with the dependable rides you’ve come to expect.”

If this sounds like a dire prediction, it’s meant as such. Uber and Lyft are facing an existential threat in AB5. And they’re losing.

(Source - The Verge)

…the companies have all but accepted that AB 5 will pass and the governor will sign it. Their focus is now on a second bill that creates an alternative employment category for gig workers.

(Source - LA Times):


… Gonzalez predicted a separate bill would fail because the labor movement is divided. “I will fight against any third classification of workers,” she said, adding she has “not heard one thing from any of my colleagues about exempting the gig economy.”

(Source - LA Times)

What’s that other bill?

The ride-hailing companies said Thursday they will commit $60 million to fund a statewide initiative aimed at the 2020 ballot to create an alternate classification for drivers that would include some employee protections and a guaranteed minimum pay. Later, delivery service DoorDash said it would commit an additional $30 million.

(Source - LA Times)

(Source - Lyft S-1 filing)

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