Does Uber really suck?
Whether you like it or not, Uber is here to stay. If you are not familiar with car-share platforms like Uber, now is probably a good time to get better acquainted. The car service company is available in 67 cities throughout North America and is also now in more than 36 countries.
If you are unfamiliar, here is how Uber works:
- Using a smartphone application, you can see what drivers are closest to your location on a map.
- After entering your destination, you can receive receive a quote for the ride, then request a driver.
- The application allows you to track your driver en route. He or she will meet you at your location the same way an on-call cab or livery service would.
- The driver then takes you to your destination. Uber keeps credit card information on file, so cash never changes hands, and once the experience is over, you can rate your driver.
Uber’s prices are comparable to a cab service, especially for its lower-end offering UberX. (I recently used the service to get from DuPont Circle in Washington, D.C., to Reagan National Airport. UberX actually cost less than quotes from local cab companies.)
With technology, it seems that the free market has stepped in to solve many of the hassles associated with using traditional car services and taxis, whose method of doing business has not changed in decades. That is what investors in the company seem to think anyway.
Uber announced that it had raised billions in funding, making the company worth more than $70 billion. At years old, Uber’s valuation means that investors believe it has more than quadrupled in value over the past year, making it worth more than the combined total of rental car giants Hertz and Avis.
It should be noted that Uber’s value to its investors has more to do with the potential of the company and much less to do with the actual value of the technology, its base of users or the network of freelance drivers it has cobbled together.
Much of the money raised in its most recent round will go to fighting legal battles, as Uber is trying to gain traction and legitimacy in areas where regulatory issues are proving to be the largest barriers to growth.
For example, last week the Virginia Department of Motor Vehicles sent a cease-and-desist letter to Uber.
The day after the cease-and-desist order was received, Zuhairah Washington and Rachel Holt, both members of Uber’s management, sent a letter to customers in Virginia, telling them that the company planned to carry on with business as usual in the state.
The company also urged customers to take to social media using the hashtag #VANeedsUber to voice their displeasure at the cease-and-desist order to Virginia state lawmakers.
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Critics of Uber point to a lack of regulatory oversight as reason enough for banning the service, and Uber drivers have had a few instances of misconduct in the headlines recently, which seemingly highlight their point:
Recently, a driver in San Francisco was charged with two counts of misdemeanor battery after he allegedly assaulted one of his passengers. (Not altogether a remarkable feat considering the track record of some cabbies in New York City.) What made the incident particularly noteworthy was that the driver reportedly already had a felony conviction on his record.
Uber bills itself as having one of the most rigorous background checks on all of its drivers in the industry. Such a check would presumably weed out a felon and exclude him from the rest of the application process.
Whether or not the company’s growing pains are any more or less than those of another growing at such a rapid pace remains to be seen. What is certain is that the company, in this latest round of fundraising and media attention, is staffing and lawyering up for the long haul.
Cabbies, competitors and policymakers should all be on notice.