Uber tests letting drivers set their own prices


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Fare play.

Well this is pretty wild:

SAN FRANCISCO—Uber Technologies Inc. is testing a new feature that gives some drivers in California the ability to set their fares, the latest in a series of moves to give them more autonomy in response to the state’s new gig-economy law.

Starting Tuesday morning, drivers who ferry passengers from airports in Santa Barbara, Palm Springs and Sacramento can charge up to five times the fare Uber sets on a ride, according to a person involved in developing the feature. Uber confirmed in an emailed statement that it is doing an “initial test” that “would give drivers more control over the rates they charge riders.”

That is from the Wall Street Journal. Uber is deeply concerned about the impact of Assembly Bill 5, the law passed by California last September that makes it harder to classify workers as independent contractors rather than employees. We talked last week about some of the changes that Uber has made to how it does business in California to strengthen the claim that its drivers are contractors: ditching upfront pricing, capping its own commission, and restoring surge multipliers for drivers. But letting drivers set fares isn’t something I ever thought Uber would put on the table.

Here is more from the Journal:

Uber’s latest changes will set up a bidding system that allows drivers the ability to increase fares in 10% increments, up to a maximum of five times Uber’s price, the person involved in developing the feature said. Once a rider pings the Uber app at the locations in the pilot program, Uber will match the rider with the driver who has set the lowest price, the person said. Drivers who have set higher fares are gradually dispatched as more riders request rides.

One ride-hail app that tried letting riders and drivers set prices was Arcade City, a Facebook-group-based platform that popped up after Uber and Lyft lost a regulatory battle and pulled out of Austin, Texas, in 2016. People who needed a ride in the Arcade City Facebook group would post their pickup information and exchange messages with drivers, who would sometimes set prices when responding to a request. It was all very internet 1.0, despite Arcade City’s attempt to pivot to blockchain. (Uber and Lyft returned to Austin in mid-2017 after Texas overrode the city’s stricter ride-hail regulations.)

Uber isn’t letting drivers set prices from scratch, but seems instead to be giving them the option to increase a base fare it provides. The experiment is particularly interesting in light of a 2015 lawsuit against Uber, Meyer v. Kalanick, that argued the company and then-CEO Travis Kalanick were engaged in a broad price-fixing conspiracy by getting a bunch of contractors together and making them adhere to prices set by the Uber algorithm. Uber folks at the time thought the complaint was wacky, and were floored when a judge didn’t immediately dismiss it. In 2017, Uber got the case sent to arbitration, which was scheduled for late last year.

The bottom line is that in the new AB5 era, Uber is obviously worried about its pricing methods in California. The most substantive changes Uber has made since the bill passed have all focused on pricing. You could argue that to let driver set their own prices is the best way Uber could hand them control of the platform, and control of course is the key to all of this. Even so, simply to dabble in letting drivers adjust their fares is unprecedented for a company that once released a research paper arguing it was pointless to raise fares, because economics. But here we are in 2020 and Uber is letting some drivers do the unthinkable. Because California.

Taken out.

After a month of speculation, Uber sold its India food delivery business to local rival Zomato in exchange for a 9.99% stake in its competitor.

By now we should be used to seeing Uber consolidate. Uber sold its China business to Didi Chuxing and merged its Russia operations with Yandex.Taxi during the Travis Kalanick era. Under CEO Dara Khosrowshahi, who has a mandate to stem losses and make Uber profitable, the company has sold its Southeast Asia operations to regional competitor Grab, pulled Eats from South Korea, and now sold off Eats in India.

Uber’s global retreat isn’t necessarily a bad thing. In the majority of these deals, Uber has walked away with a sizable stake in either its competitor or the merged entity. It’s arguably better for Uber and its investors to own these stakes than to overextend the business and bleed cash in markets where it often operates at a disadvantage to local competitors. It’s certainly preferable for investors who’ve backed several ride-hail firms to have them forge a truce than to watch each one hemorrhage money in a turf war (SoftBank, for example, has invested in Uber, Grab, and Didi).

Khosrowshahi said in November that Uber’s strategy for Eats was to “invest aggressively into markets where we’re confident we can establish or defend no. 1 or no. 2 position over the next 18 months.” India wasn’t one of those markets. Uber was a distant third to homegrown firms Swiggy and Zomato.

As you’d expect, all these companies are burning lots of money. Analysts had estimated Uber was burning $400-$500 million a year on Eats India. Uber said in a securities filing today that Eats India had 2 million monthly active users in the 2019 third quarter—down from 3 million in the previous two quarters—and lost $61 million on $20 million in revenue that quarter. Its loss from operations for the first nine months of 2019 was $244 million on $28 million in revenue. The Times of India reported Zomato late last year was burning $20 million a month and Swiggy $47 million.

Both Swiggy and Zomato are now battling for the title of [pick your impressive-sounding adjective] market leader. Swiggy in December claimed to be the “clear market leader” with “close to 60% revenue share.” Zomato said today, following its Uber Eats acquisition, that it is the “undisputed market leaders in the food delivery category in India.”


LimePass, e-scooter company Lime’s first subscription product, is coming to the UK. The pass costs £4.99 a week, in exchange for which Lime waives the £1 fee to unlock an e-bike for each ride. Riders still pay the per-minute cost associated with their trip, or £0.15 per minute in London and Milton Keynes. (In the US, LimePass costs $4.99 a week and waives a $1 e-scooter unlock fee, but not the per-minute travel cost.) The program is designed to appeal to frequent Lime users, such as the roughly 50% of riders Lime says use its service to commute to school and work or run errands.

“Depending on how often a rider uses Lime, the subscription can pay for itself in as little as 2-3 days,” Lime said in a rider email. Is this a good deal? I’m not so sure. You need to ride Lime at least five times a week to pay off the cost of the subscription, and at that point maybe you should just get your own bike or scooter?

One problem I imagine all the micromobility companies will run up against is the line between what people are willing to spend on a service before they decide to invest in their own device. Take Oakland, California. Lime said last year that the median ride time on its first 1 million e-scooter trips there was 7 minutes. Currently, a 7-minute Lime ride in Oakland costs $3.24 ($1 to unlock plus $0.32 a minute). Alternatively, you could buy this scooter on Amazon for $450. At a median cost of $3.24 a ride, it would take about 139 rides before it became cheaper to have bought your own device instead of continuing to rent—and that’s if Lime doesn’t raise prices. Certainly if you were a regular commuter, it would make sense to get your own scooter.

LimePass seems like an attempt to make Lime more like public transit, but what if those things just don’t mesh? Public transit systems are famously unprofitable. (So are scooter companies, but that is perhaps not the long-term goal.) Here is an interesting essay from Alex Nesic, co-founder of Clevr Mobility, arguing that for shared micromobility to be truly public-transit-like, profit can’t be its main objective. Nesic suggests cities should run and subsidize these services directly, rather than go through startups and take indirect subsidies from venture capitalists:

Some might say that investing in such a ‘new’ technology is not the right move for cities, but I would argue that the required investment is rather insignificant in comparison with more traditional transportation project costs. Consider that the global average cost of building (operations and maintenance aside) a subway line is reportedly $500 Million per mile (often much more in the US) and takes decades to complete, or that new buses cost anywhere between $500K — $800K each with up to $215/loaded labor hour to operate. In contrast, a high quality ‘fleet grade’ scooter costs approximately $500 — $650 and around $12 — $15 per day to support. Roughly speaking, a fleet of 1000 scooters could be acquired and deployed for one year at a cost of $5.5 Million.

You could also take this one step further and argue that instead of taking on deployment and management of scooter fleets, cities could just subsidize private purchases of e-scooters and e-bikes. That would encourage alternative transport modes, involve a lot less work for the city, and be a no-brainer purchase for the frequent e-scooter user.


Or at least so says SoftBank:

“We are still in it, we are involved, we are helping the company because we believe the idea at its core is very, very good,” said Deep Nishar, senior managing partner at SoftBank’s Vision Fund. “We will help solve WeWork’s problems with corporate governance with the next set of management,” he said at Munich’s Digital Life and Design conference Saturday.

Honestly, can you imagine spending $9.5 billion to bail out a company that you didn’t still believe had a good idea at its core?

Elsewhere: WeWork’s leasing activity plunged 93% in the fourth quarter after failed IPO attempt

This time last year.

Federal workers are ‘making ends meet’ on Uber

Other stuff.

SoftBank secretly invested $750 million in on-demand startup GoPuff. WeWork co-CEO warns of corporate culture misfit. Uber’s Jump launches adaptive scooter pilot in San Francisco. Lime introduces adaptive scooters in Oakland. Skip reveals scooter upkeep metrics. European Investment Bank backs Uber rival Bolt with €50 million ($56 million) loan. Arrival raises $100 million for electric delivery vans. Turkish grocery delivery startup Getir raises $38 million. Quanergy CEO leaves after lidar stumbles. Spanish delivery startup Glovo exits the Middle East. Goldman dumped entire Uber stake late last year. Investors eye increasing stake in WeWork China. Adam Neumann in talks to boost investment in mortgage startup Peach Street. Uber ending ride-hail service in Colombia. Uber driver banned after carrying passengers holding ladder out of car window. Uber and London in talks over licensing dispute. New York governor expected to propose legalizing e-bikes and e-scooters. France loosens employee stock option rules to help French startups compete for talent. Airbnb writes long memo. “As I type, they are busy turning our street into a low-traffic, communal woonerf.”

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