The curious case of UBER

Dhaka,  Thu,  24 August 2017
Published : 15 Jun 2017, 20:40:46
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The curious case of UBER

Mahmudur Rahman
In hindsight it was the wildfire success of Facebook that re-channelled focus creating the information technology (IT) bubble. Up went the stocks as well as expectations of a new and exciting future for livelihood. Then, of course, came the failures - at least in terms of overnight winners. Not enough homework on prospects and weak business cases that were overlooked in the fever of anticipation. The arrival of UBER was, however, different. 

It seemed to be a match made in heaven, allowing individuals to work when they wanted, at times at rates much below the profitable rates. The customer had the added convenience of not having to wait in the streets and being guaranteed safety. The cab industry was in uproar, seething as they watched their livelihood dwindle. But the real enemy was within.

Essentially the revenue sharing arrangement was an offer with no compulsions. Drivers used their own cars, bought their own petrol and chose their assignments when the offer went out. Part-timers, including retired persons found it a useful way of passing time and making themselves useful. The problem was created by those choosing to make it a full-time profession. It takes two to tango and inevitably two persons emerged filing a case for appropriate compensation, sick-leave and other benefits. UBER have said they will appeal the case but already the top-two executives of what has become a multi-billion dollar enterprise have left the roost in their own ways. Whether this is an advance notice of admission of guilt, remains to be seen.

If defeated in court and the subsequent appeal, UBER could choose to wind up. Or it could begin to release millions to address the issue and redone its business model. And as always, there will be new questions about how far and wide labour laws really stretch. Because, after this, especially in countries where laws differ, the bill could be much higher. UBER is on the expensive side in Dhaka but comes with convenience and safety-big factors for mothers and their children and much more important in a society such as ours. Given that the issues centring which UBER was sued is almost a non-starter, Bangladesh may be an area where the business can continue though it would upset the apple-cart of volume vs value.

Somewhat akin to Facebook (FB), return on investment has been phenomenal what with such low injection of capital. Unlike FB, UBER cannot expect revenues beyond the fares to boost growth.

The company, reportedly worth $ 72 billion has in recent times been bedevilled by governance issues that are inevitable for a corporate body. It made few friends by opting not to join a taxi-cab strike protesting Donal Trump's travel ban. Then it had to pay-up $ 20 million to settle a Federal Trade Commission charge that it misled drivers about potential earnings. And matters were made worse by revelations that it had no bank of human resource (HR) skills to address concerns and grievances of drivers.

Questions are being asked about start-up companies with achievement falling short of expectations. As more and more apps flood the market the ability of the human mind to choose and select may have been overestimated. But when it comes to business, the case for it has to be robust. With all young minds looking at the get-rich quick phenomenon, traditional and established businesses are moaning over further reduction of pipeline talent. As it is quality of emerging graduates are leaving a lot to be desired. If the trickle is reduced further, it looks a bit gloomy. 



mahmudrahnan@gmail.com

 
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