The news that London’s transportation regulator, Transport for London (TfL), would not renew the licence of Uber to operate in the city sent shockwaves through the tech world. Uber had invested heavily in London, and built up a huge customer and driver base. And yet, the fact that they thought they could skirt the rules in pursuit of growth is a move that came back to bite them. No one was more shocked than Uber themselves.
Future of Car Sharing
The resolution to the situation is still pending. Sharing economy insider and Quartz journalist Alison Griswold wrote that “for all the bluster this decision has caused, my guess is that it doesn’t disrupt Uber’s service in the slightest. By the time the appeal makes its way through court, either Uber and London will broker a deal, or the city will back down.” Regardless of the outcome, though, the shock decision does hold some important lessons that can be learned from Ubers mode of operation, and the backlash to it.
Not All Uber Press is Good Press
Anyone who has been paying even marginal attention to the business side of Uber knows the company has been dealing with myriad problems of late. From sexual harassment claims from one of their engineers, to founder Travis Kalanick’s decision to step down from the company, Uber has been in the spotlight for all the wrong reasons. But this turbulent time is somewhat consistent with Uber’s adherence to the “move fast and break things” mentality that’s very popular in Silicon Valley. They didn’t accidentally skirt the rules to gain first entry in the ridesharing market, they intentionally did. In a way, this decision in London is the first time they’ve been properly taken to task for those decisions.
In an email that Uber’s new CEO, Dara Khosrowshahi, sent to employees after the decision, he seemed to acknowledge the fact that Uber’s past is catching up with its present: “The truth is that there is a high cost to a bad reputation. Irrespective of whether we did everything that is being said about us in London today (and to be clear, I don’t think we did), it really matters what people think of us, especially in a global business like ours, where actions in one part of the world can have serious consequences in another.”
So what can CEOs and future startups learn from Uber’s unfortunate predicament? Here are three lessons:
Devil is in the details.
TfL didn’t ban the concept of Uber outright. Rather, they were flagged for not adhering to the specific regulations that all minicab operators in the city are expected to abide by, mostly relating to safety and background checks. Note that this was easily avoidable for Uber, but it’s likely that they assumed their market dominance protected them from the need to follow the law to the letter. They learned the hard way that was not the case.
When stuff goes down, your reputation matters.
As soon as the decision was made, Uber created a petition to send around to its users asking them to back the company, but many users were already fed up with the way the company was operating. Bad press adds up, and Uber had plenty of it. They probably didn’t realise that even some of their users wouldn’t support them if they got into hot water, but that’s exactly what happened.
Your rallying cries can come back to haunt you.
Uber had gone to court several times to argue that they don’t have employees, but rather “independent contractors” who were free to work at will. That’s why it sounded a little disingenuous when they insisted that removing Uber from London would result in the loss of tens of thousands of “jobs”. The lesson here being that once you argue strongly about how you operate, you can’t then change the goalposts to suit your own needs.