Frequently in recent months my cab rides have turned into conversations about Uber. It is possible that drivers are fishing for a sympathy tip. But I sense real frustration. I have heard from more than one that ride-sharing has taken 20-30% of the market. A lot of people in that industry came to America from countries without opportunity. They found something better here in the taxi business. Now it seems they are getting worked over by a bunch of hipsters.
Ride-sharing services like Uber and Lyft are not going to last. If you Google “Uber drivers how much do they make” or something like that you will get the sense drivers are not taking much home after expenses. Plus, to not make much they are putting sizable wear and tear on their personal vehicle. Right now it is all pretty new. So possibly drivers have not had time to run into a lot of big repair expenses yet. It will certainly happen if it has not already.
Getting in an accident poses more problems. Everything I have heard says a personal auto policy won’t cover ride-sharing situations. Apparently Uber provides insurance. But one report says getting in a ride-sharing accident will result in cancellation of your personal policy. That same report says getting your personal policy cancelled means you cannot drive for Uber any more. Insurers, such as Allstate, are now starting to provide ride-sharing policies. But buying one means additional expense. This all seems like a lot to figure out for a job that might not pay much. I guess you could jump in without figuring all the insurance out. But that is a big, big risk.
The people who started this whole concept are smart. They saw they could float the idea for a while and take in a ton of money. Eventually people will figure out that it is just trendy nonsense and quit. Then Uber and Lyft can file bankruptcy and the stakeholders who took money out walk away with great personal wealth, made off the taxi industry’s back and the backs of their ride-sharing drivers.
“Changing the world” is a pretty good angle if you think about it. There are always people who want to be part of something like that, probably more so while younger and more impressionable. An organization gets up in public and says, “you are all being robbed blind. But WE will help you! WE have the groundbreaking, innovative answer to unlock the chains and move society forward!” Then the money rolls in from people who want to be part of. That is how we got Wikileaks, Groupon, Bitcoin and others. Now it is Uber. In a few years it will be something else.
It is not an angle without risk. Just ask Wikileaks founder Julian Assange. He became trapped in the Ecuadorean Embassy in London and funds to his organization were severely curtailed. Groupon ended up restating it’s financial results shortly after going public. They were investigated by the Securities and Exchange Commission. Since then their earnings have been negative every time I look and Groupon stock is in the tank. The large MtGox Bitcoin Exchange in Japan filed for bankruptcy and it’s CEO was arrested.
I will close with some advice. To the citizens of Chicago: If you need some extra money try bar tending. To the people running Uber: plan your exit strategy carefully. From what I can see people who try to “change the world” do not have a great track record.
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