Uber and Gig Economy Are Not Leaders of the Economic Recovery
Uber has billions in cash, it is not at risk for going out of business. Yet with a stock market divorced from the reality of economic data, Uber seems to care more about its stock price than about jobs.
The Gig Economy once heralded as good for the economy, trapped thousands of workers in low paying jobs with no way out. I personally find the conduct of Uber embarrassing for a startup that received so much money from venture capital and investors.
Uber has laid off nearly a quarter of its workforce, and it’s not even profitable yet.
Uber is cutting 3,000 more jobs less than two weeks after an initial round of layoffs as on May 6th affected 3,700 employees, which was 14% of Uber’s workforce at the time. This was supposed to be the most amazing disruptive American startup company. The young wolf of Silicon Valley sure doesn’t look so great, in conduct and as a business now, in 2020.
I find it sad and a telling sign of American innovation that Uber has confirmed it will lay off thousands more employees and close 40 offices to further cut costs. While this pleases investors, it does nothing for the American economic recovery.
It shows how businesses behave even when they have the privilege of millions of dollars on hand, veritable war chests of investors out of Japan (Softbank Vision Fund) and via Saudi Arabia.
There’s always been something dirty about Uber, something exploitative, fraudulent and semi-illegal. CEO Dara Khosrowshahi said Uber would also be shutting or consolidating 45 offices around the world and it is considering cuts to other businesses, such as freight. This at a time when workers in the tech center need their jobs the most.
The ride-hailing company has now laid off 25% of its staff after being hit hard by the coronavirus pandemic. Uber Eats still isn’t profitable, even as Uber mulls acquiring GrubHub to create a food delivery monopoly. Uber has in recent years had to pull out of regions of the world where it was grossly unprofitable and has been hit with legal issues.
CEO Dara Khosrowshahi told staff in an email on Monday May 19th, 2020 that Uber’s rides business is down by around 80% as much of the world shelters in place. Disruptive eh? Uber’s business model never made much more sense than WeWork’s did.
Uber Eats and Grubhub would represent a 50% marketshare of the food delivery app sector in the U.S. San Francisco-based Doordash has always been superior. This new round of cuts would leave Uber with about 20,000 employees, based on its latest available head count figures.
Uber’s employees have always been expendable while Travis Kalanick got rich. For years Chinese companies have been copying Uber’s tactics that border on shady practices and toxic cultures.
What ever happend to Uber the shiny Unicorn? Not so arrogant anymore eh, Boss? Uber estimated it would take a charge of $175 million to $220 million related to the cuts mostly in the second quarter of 2020, including approximately $110 million to $140 million connected to severance and termination benefits besides stock-based compensation. Let’s make America great again and let tech workers work from home, at least those who have the privilege of being able to do so!
The company said the measures are expected to save at least $1 billion annually and that its key business functions wouldn’t be impaired by the cuts. Uber already has the luxury of being one of the most funded startups of all time. As if hopping in a ride-hailing vehicle is something I want to do anytime soon.
Uber had aimed to reach EBITDA profitability by the end of the year, but it has since acknowledged current conditions have set back that timeline.
Uber’s idea of pivoting in 2020 is firing a quarter of its workers. Uber’s idea of innovating is doing that all the while going after expensive acquisitions like Grubhub. It’s just disgusting what Silicon Valley does to “reach profitability”. While a stock market divorced from reality has been propped up by the Fed to protect the rich, millions of the most vulnerable North Americans are out of work.
Uber cheated to get ahead, but couldn’t protect its own employees when it was disrupted. All the while Uber’s balance sheet is strong. Go figure, Dara. So much for those fabled San Francisco workers, it’s time to leave that overpriced city. Softbank made a lot of dumb bets, but I think history will show this was the absolute worst.