I’m really starting to warm to Uber’s new CEO. Speaking in Davos, Switzerland at the World Economic Forum last month, Dara Khosrowshahi made some big news for drivers that I think went under the radar and very few noticed.
Many drivers have been frustrated that Uber seems to think the best number of drivers on the road is as many as possible. Anyone who has been driving for more than a few months has probably seen the time you wait in between trips increase. That’s because every few months there are a lot of new drivers added to Uber’s rolls but not so many new riders. So you have more drivers serving the same number of customers.
For years, I have argued that what Uber should do is limit the number of drivers simply by eliminating the bottom third. In other words, eliminate the 33% of drivers with the lowest ratings. That would have two beneficial effects. It would make for busier times for each of the remaining drivers and it would improve the service.
But for as long as Uber has existed, no one in upper management has seemed to care about either of those problems. We’ve seen the quality of service move markedly downhill every year. And we’ve seen the quality of service slide as more and more new drivers were added making it more and more difficult for drivers to keep up their cars on less and less.
For anyone who has been driving with Uber for more than a year (the one half of you that stayed around that long), you have probably noticed that one of the biggest problems drivers face – is too many other drivers.
It has been obvious for a long time that Uber should limit the number of drivers by focusing on keeping the best drivers and rewarding them in order to make the service an all-around better-quality choice for riders.
But, all we saw under the “leadership” of Uber’s former CEO is that all they seemed to care about was ever-bigger numbers. More drivers, more riders, more trips. That was their sole focus. There was no focus at all on quality and there was no focus the related issue of driver-rentention.
Dara’s Major Announcement
Now however, the new CEO, Dara Khosrowshahi, has announced a major change that will be coming sometime in the near future. He said in Davos:
“We want to allow the user to opt-in to a higher level of service because right now the only higher level of service that we define is a nicer car … And I think the car and service are two different things so we have to bring much more fidelity into our system and we are very, very early on that path,” he said.
This is huge, although he says it in a kind of corporate-speak that tends to shroud his real meaning. But look closely at what he said.
He said right now Uber’s only service classes are distinguished solely by vehicle type. In other words, you have uberX with low-end vehicles, you have uberBlack with luxury vehicles and you have SUVs with, of course, high-end SUVs.
But he says he thinks there is another class of service, which he calls “service”. And by that, he is referring to the quality of service provided by the drivers – which is a distinctive in addition to what type of vehicle is in use. And the quality of service that a driver provides will be determined in large part by driver ratings.
While he pitched this as a benefit to the riders, it would also be a huge benefit to the best-rated drivers.
He also announced at Davos that Uber is developing a new mechanism to improve the experience of riders. This new “mechanism” will allow passengers to opt-in not just for a higher end vehicle, but also for drivers with higher ratings. He gave no specifics because, as he indicated, this is “very, very early on”.
It would be reasonable to assume, since he has linked vehicles to service as he spoke about the various classes of service that Uber charges different rates for, that they may be contemplating charging passengers a premium price for these premium drivers.
And if they’re smart, they’ll pass that price increase on to the drivers to reward them for a job well done and to motivate them to keep doing a great job.
This is huge news both to low-rated drivers as well as to highly rated ones.
And One More Big Piece of News!
Fully self-driving cars are… a long ways off.
In another huge public announcement while in Davos, Khosrowshahi said… what those of us who have watched the whole driverless car thing closely and ignored the media hype have always known – that completely driverless cars are a very long ways off. He said Uber will be using human drivers for a very long time to come.
When asked on CNBC’s Squawk Box what he sees for driverless cars, he answered saying,
“I think that it’s going to take a long time to get to full, full autonomy. In software, it’s difficult to write software that solves every single problem out there and there are edge problems in software that create issues. Edge problems in autonomy threaten lives.
“I think the key with autonomous is that there is going to be a hybrid period where you’re going to have certain routes that can be served autonomously and there are certain routes that only a person can serve. And I think we as Uber are in a very, very good position, having autonomous and having the network under one roof to get from here to there. But, the there is going to take… I do believe is going to take ten plus years.”
While they’ve made tons of progress on these cars, the problem is the so-called “last mile” problem. That’s the phenomenon known well in the cable TV industry, where it took about as much effort to string cable from the phone pole on the street into each person’s home on the block as it took to get the cable from the cable company’s offices to the street. In other words, the last mile was as difficult as the first ten miles.
Dara mentioned “edge problems” in software. You can see that problem in language translation software. They’ve gotten to a point where language software can translate with 70%-80% accuracy most of the time. But they’ve just not been able to get that last 20%-30%, despite decades of trying. That last little bit is taking far more time than it took to get the first 80% done.
Autonomous cars are going to be the same way. They’ll be able to drive proficiently maybe 90% of the time. But that last 10% will be a real killer (literally) if they don’t get it right. And that’s exactly what Khosrowshahi has recognized.
What You Should Do to Prepare for the Coming Changes
It’s very obvious these changes are going to affect you. And when they do, you’ll fall on either end of the spectrum, without much room in-between. Here’s what you need to know.
Keep doing what you’re doing. And try to get your ratings up even higher. My guess would be that if you’re at 4.85 or above, you’re going to be in a great position if they do in fact make this change as Dara suggested they would.
The worst case scenario is that you’ll make more money simply by getting more trips. The best case scenario is that Uber will charge customers a premium price for the privilege of requesting highly-rated drivers – and they’ll pass that premium onto you, the driver. Minus their regular fees of course.
Do not keep doing what you’re doing! Improve! Work harder and smarter. And most of all, take pride in your work.
If Uber does make this change, things could get very difficult for low-rated drivers. I’m guessing anything below 4.80 is going to make life very hard for you.