Yesterday, on April 7, 2016, UberPITCH rolled up to the curb in six Canadian cities, including Vancouver. I think I may have been the only person in the country who was unimpressed by their marketing gimmick, in particular as Uber is not presently permitted to operate its taxi service in Vancouver. Investors and entrepreneurs, in the angel space and impact investing space alike, glowed about what a great idea UberPITCH was. I agreed to disagree.
The four-hour stunt (as it was described by the newschannel CBC) came two days after an event hosted by LOCO BC on the sharing economy, at which Uber was mentioned (and questioned) a number of times. Businesses in the sharing economy need to include reciprocity within their models, otherwise it’s just services & transactions.
So, what do I really think about Uber? I answered a question on Quora about whether Uber is a social impact company, using the evaluative tools and techniques that I use everyday in my investing activities.
Uber is a logistics company. Uber provides people with convenient and efficient access to an essential resource of connection – getting people from point A to point B in a vehicle. Its logistics technology is seen as an improvement upon the dispatching technology of traditional taxi companies as it is able to organize a fleet of cars more efficiently and expediently. On the basis of this alone, I cannot conclude that Uber is a social impact company because it makes an already conveniently and efficiently accessible resource of taxis more convenient and efficient. It didn’t, for example, give people without basic access to transportation improved access.
Does Uber give drivers improved access to essential resources?
In other taxi company business models, drivers are employees. A number of taxi companies are organized as co-operatives, where drivers are co-owners (such as inand , which for bankruptcy protection).
Uber drivers are self-employed contractors. Uber essentially gives self-employed drivers improved access to customers and improved access to a livelihood driving cars. Uber’s technology can be an improvement over a human dispatcher (that may or may not distribute customers fairly) and can an improvement over a taxi driving around the block several times hoping for a customer off the street. On one hand, more people could gain access to a livelihood driving cars.
On the other hand, the skill of driving a car and getting someone from point A to point B in the quickest, safest fashion is de-valued. In the UK, driving a black car is a recognized trade. Getting into an unlicensed taxi (called a mini-cab or private care hire) is tantamount to having your toilet repaired by anyone, rather than by a qualified tradesperson that trained as a plumber.
Uber made a strategic business decision to deploy its technology on its own fleet (i.e. anyone with a car who was willing to be a self-employed driver), rather than attempt selling the technology to taxi companies or the.
Cost/Benefit Analysis for all Stakeholders
Whilst it may seem as though Uber provides people with improved access to essential resources through its supply chain, we have to also look at the impact Uber has on stakeholders outside and around its business model. As noted above, Uber is competing with taxi companies and black cab drivers, who are losing customers. Uber chose not to be structured as a workers’ co-operative, therefore drivers do not benefit financially from Uber’s growth and gains in market share.
Uber has also been very public about its ambitions to develop a, further emphasizing its position as a logistics technology company. Its primary motive is to give people who already have convenient and efficient access to transportation even easier access to convenient and efficient access to transportation.
Uber is not a social impact company
Uber does not illustrate a philosophy of “taking care of the village” and does not provide meaningful improved access to an essential resource.
The concepts of Access to Essential Resources and Cost/Benefit Analysis for All Stakeholders are just two of the tools and techniques that I describe in my new book, Integrated Investing: Impact Investing with Head, Heart, Body, and Soul.
Integrated Investing helps you make confident investment decisions that align with your values and make a positive difference in the world.
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This post was originally written as an answer to “Is Uber a social impact company?” I answer questions on Quora daily. If you have a question about impact investing, social impact, angel investing, or startups, ask me anything.