Uber's IPO Has No Clothes
Published in Online Spin, May 10th, 2019
By the time you read this, Uber will be trading on the New York Stock Exchange.
I am not happy for it.
This is a company that, after being in existence for a year and a half, decided it would be a good idea to track “Rides of Glory”: where you take an Uber to a location between 10 p.m. and 4 a.m. on a Friday or Saturday night, and request a second Uber four to six hours later.
This is a company that was sued by 350,000 drivers in 2013 so that they could be entitled to extravagant luxuries like… a minimum wage.
This is a company whose behavior runs the gamut from unethical to fraudulent. It tried to pair men with “hot women drivers.”
It installed software to track your phone even after you deleted the app.
It created software to avoid fines and regulation by deceiving riders who work for a city agency or law enforcement; you’d see plenty of cars on your app, but none would pick you up.
It was sued by Waymo for stealing IP and settled for $250 million.
It ran a public test of autonomous vehicles without sufficient protections—and Elaine Herzberg died.
I typically write about 600 words in my column. There’s no way I can cover all of Uber’s misdeeds. The Intelligencer’s list of awful things the ride-sharing company has done runs nearly 4,000 words—and only goes until June 2017, when CEO Travis Kalanick finally got his comeuppance and was shown the door.
It was a humiliating price to pay, but a necessary one. There must be consequences for being at the helm of such egregious misconduct.
Kalanick’s ultimate consequence? At an initial price of $45 per share, he’ll be worth more than $5 billion from the IPO.
As Stratechery’s Ben Thompson points out, this is a company that, in its S-1, doesn’t reveal:
—Uber or Uber Eats acquisition and retention costs
—Revenue and profitability by geography and product
—How these things are changing over time How driver incentives affect top-line revenue, or how “excess driver incentives” have changed over time
—How costs are allocated, particularly when it comes to rider marketing and incentives
—A breakdown of Uber’s many offerings (Black versus UberX versus UberPool etc.)
But Travis gets $5 billion.
Ahead of its IPO, Uber drivers went on strike in Chicago, London, New York and more, protesting arbitrary changes in pay structure that the drivers get no say in. One driver said “his pay has dropped to about US $900 a week for 60 hours of work after expenses, from US $1200 for 40 hours two years ago.”
But Travis gets $5 billion.
He likely won’t be happy about it. The original plan was for the IPO to value the company 40% higher, around $120 billion. But there wasn’t enough demand. Poor Travis.
This isn’t just about Travis; he’s just easy to pick on. It’s about the fact that, while we say we want more values-led companies, and BlackRock’s Larry Fink tells CEOs they have to have a social purpose, we are still rewarding companies like Uber.
And Travis, who got away with it all, sits on his $5 billion and laughs.