How Uber Overcame Threats & Controversy - Part 2 - A Case Study for Entrepreneurs

hello again everyone, this is Tom Ellsworth, and welcome back to the

case

studies with the business paper as promised. you saw in the headlines and how they responded to them while we're at it we look back on

part

1 and the amazing CEO Travis kalanick in

part

1 and if you haven't seen it go back and watch we saw what it was like. from dropping out of UCLA to running the most valuable private company in the world today and we saw how he raised money, built a team and really managed to scale and drive that company forward today.

Let's look at a couple of those problems that they ran into. from 2014 to 2016 and how they responded to them, there will be lessons on how you can respond even if you just have a small business in the middle of a small town or maybe joining a big company. I'm creating one tomorrow and you'll be taking these lessons with you so let's take a look at what the two focus points will be the first one is the defenders of the status quo you know the way we do it now the way we defenders have always done it from the status quo they want the benefits of innovation and technology always as it doesn't require them to change or do anything point number two yes growth always inevitably at some point brings a regulatory response whether you have to go talk to your city council or end like

uber

did on Capitol Hill or Capitol Hill steps and those are our two points for the day so let's dig in and take a look at three things that happen to Burr and how we can apply them in our businesses.

The first is the classic debate of what is an employee and what is a contractor. you know everyone wants to be an independent contractor and have all their freedom but then on this side everyone wants to be an employee and have the company pay part of their taxes and pay unemployment benefits well you know you can't have both things and some ub Drivers discovered that you can't have both, but Uber responded intelligently to the

controversy

. You see there's a driver in San Francisco, she was a woman and she had been driving for Uber for some time and she started a lawsuit that said we're employees, we're not independent contractors, but if you look at the definition of independent contractors, whether you're hiring someone for your business or maybe you were an independent contractor, you usually set your own hours and determine when you work. and is based on the results.

I need this done and I'll hire you to do it. Well, I may be there in the afternoon. Maybe there this date. It's done as long as it's done on Wednesday, but employees would be told to show up at 8:00 AM. m. Wednesday and work until the end of the day just take this break and get benefits and you pay taxes that's an employee when the type of contractors are not like that and they to us They usually have their own tools, make their own hours and deliver the result for a flat fee, well isn't that what an

uber

driver is?

I have my own car, uber inspects it to make sure it is a good car in good condition. and I make my own hours. I take my uber driver app. I'm available, click I'm not available. I come and go when I want. in San Francisco, but there are a lot of employment

case

s that tend to come out of San Francisco and if you're looking from around the world, there's also this Court of Appeals in that area of ​​Northern California that invariably has a lot of employment cases and laws. in the united states they come there but anyway they have this big fuss they come and go and finally uber is like man i have better things to do i have a company to run and they said let's figure it out. so they settled the case now if you settle a case that is an inter entity case b inter business or maybe a person in the business or a person and a person realizes that it wasn't the federal government that attacked them for a violation of the labor law doesn't solve those cases you know you pay your fines and you know the government usually has the upper hand, but in this case they settled with this group of drivers saying they would pay up to a hundred million dollars in a fund and they would also have a better communication with drivers because CEO Travis Kalanick said they know there are some fair points here, as we've grown to four hundred and fifty thousand drivers, there have been times where we could have communicated better with our drivers, we could have been more clear about where they could find copies of the policies, such as the policy for when we would do it. disable a driver for performance reasons or complaints or very low reading or maybe they said something horrible and we need to put that in writing and we need to have more regular conversations with us r drivers and they know what we're going to do so we kind of learned through From this, we still feel like independent contractors to everyone, but we're going to settle the lawsuit so we can continue to build uber on this billionaire. company and that's exactly what they did did you know this is precedent in other ways as well there are things in terms of handing in assignments and doing like a concert and you can look up this is called the gig economy that there will be parts of us that will live in a gig economy today i did a couple gigs this week i did a few gigs TaskRabbit Fiverr uber lyft all these are examples of you decide when you go do gigs you say ham available you do it they pay you a little of the money goes through bert a a little money goes to raise a little money goes to TaskRabbit and then you keep the rest and then the gig economy people are independent contractors you will have to have your own insurance and you will have to pay your share of social security taxes on the United States so it adapts well with uber is that it is not the end this is going to continue to happen in the gig economy and if you find yourself working or building When you're a company that's in the gig economy you want to be very specific and very careful that people are independent contractors and don't cross any lines.

I think it's a good lesson for us and for me. When you're starting out you probably can't afford a lot of employees and you can hire like a PR person as an independent contractor because you can't pay a PR or marketing person to build your website it's going to be the gig economy and so you have to make sure you don't cross the line between employee and independent contractor and that's what Oberer found out and uber did a great job. I think you did a very good job of responding, especially in California, where you know a lot of times you'll find certain politicians who are really on the side.

Labor and they think companies can't do anything right except we're creating jobs and making money and helping people make a living outside of that entitlement, it tends to happen, you know, California is a little more liberal, not everyone is a little bit more liberal and that's where this stuff came up so I think what the lesson is that an independent contractor is pretty clear and I think Oberer, you know, responded accordingly, there was another lawsuit that was very similar to that of Massachusetts or something similar, but Uber fixed it and moved on and I think they did a good job and I think there are lessons we can learn now.

The second thing that happened is I call it lost in austen and this is where a law was passed in austin texas that required a few things, you had to fingerprint cab drivers. or people who drive a limo and guess what was being applied to oberon lift they also wanted me to put big signage on the car to clearly label the car was a rideshare or a taxi or that kind of company and cars and there was a couple of other things they had there as well and uber and lyft said wait a minute you're going to require fingerprinting of all drivers background text you know we don't think this is fair to minorities we don't.

I don't think this is fair to a lot of people and you had a lot of reasons for that and they said we'll want this and you know we want to go talk to you at City Hall and you did, but a ballot measure came out and in the election, the people of austin voted to support it so people voted said i think this is a good idea lyft and uber stood their ground and said you know what? if this is what it's gonna be we're leaving and austin texas say what i hate to see you do that but that's your choice and the reason i call it lost in austin i think uber and lyft lost i'll tell you why Austin is where the South by Southwest Music Festival is now for those of you who are into music that's what they call it.

I refer to it as South by Southwest Technology Festiv. all because what started out as a huge music festival has become an amazing tech incubator and there's a lot of bands and a lot going on, but you can also go South by Southwest and there's all kinds of new innovations coming to Austin, Texas, for the better part of a week and who's who's a business outlet there now, why is that so important? Well Austin said we're only going to incubate right-share companies that want to comply with our law and before long they had seven new little rideshare companies being built in Austin Texas so if you're going to get mad at the government and You're going to say I can't understand that law and I'm going to leave, don't do it in Austin.

Texas is a hotbed of entrepreneurial thinking and a town hall that understands

entrepreneurs

because nowadays there are some challenges, right sharing is a little more expensive, they're putting out more cars now so there's a little bit of a shortage in the beginning but the point i s coming back in the same year within 12 months of uber and lyft saying i'm pulling out of austin and i think cooper probably thought we'd pull out of austin would be a whole they can't get their rideshares they'll be writing letters to city hall to even though this law was approved by the voters by the people it's all going to come back and we're going back to austin when it's all figured out i guess austin said no we're going to incubate some stuff and we're going to figure it out ourselves and they've almost done it like this which i think i call it lost in austin because i think its a loss to look at it again i think uber probably should have dealt differently and lift both of them i think that the lesson for you and me is to be careful before you turn your back on anything because you may be giving an opportunity for someone to come after you and I think in the modern economy with the speed at which new businesses can operate . don't think about becoming You're back, especially in a city, it's a hotbed for

entrepreneurs

hip that has a festival that involves entrepreneurship, which is who's who of all, it's in town once a year, I don't think be a place to do it and, as we have seen, there is now tuber. competitors and lifting competitors in austin texas are being incubated and basically sorted by the city so probably a lesson there for all of us is probably other ways to do it a lesson there in hungary you're not supposed to be hungry i know it seems like some sort deformed blue bean but hungry and will star in Budapest in Budapest Hungary something happened there and I think Boober did the right thing the government decided they wanted to stand up for taxis and they wanted to stand up for the Taxi Union. and carpooling was catching on. a whoa whoa is if you speak Hungarian and they went to the government the government stepped in and they have a very big lobby you know that organized labor in socialized Europe is generally a powerful government lobby and in this case they passed the law when they referred to Hoover and other rights actions like illegal dispatcher services note just through the word illegal right up front it's not alternative taxis it's illegal dispatcher services great right out of the box you know you are being referred and labeled as illegal, by the way, that's a political spin on you from the beginning that puts you in the and they said that if someone drives for an illegal dispatcher service and bypasses the Taxi Union, they will lose their license to operate a vehicle for up to three years ok there you go and everyone is like option one i write i do something with uber or a ride sharing service they catch me now i lose my license for three years not even i can go back and be a taxi driver r i mean this kind of thing i think its just socialism just invoking its will over capitalism as it rises here they are here they have the people the citizens of hungary nobody cares , these people are teaching you ways to get there. work cheap and maybe maybe a single person on this side of town can now get a job on this side of town because maybe public transportation didn't help them and now they're taking the low cost shared service uber through the city and there are other things were made available to them, but no, we all intervene, we are going to defend the taxi union, it has always been that way, it will be that way and here they know, they tried to negotiate, but I think they did the right thing, it's just like hey, you know if you're going to legislate me, you know what that is, it's not a difference of opinion, as if I agreeagree someone fingerprint or not and put signs on my car that's an opinion you can stay in austin but these are the rules in buda plague we want you removed and we want you to leave and the hungarian government did that so so there you have it again the three things were up fighting a lawsuit in california when people were saying they were employees vs independent contractors and they held their ground appropriately and finally settled to move everyone forward then lost in austen , you know, reacting, I think too strongly, to a simple government regulation that was a crime taking the fingerprints but encouraging them to stay in the city and keep operating that they chose to leave and then the third one when Hungary basically closed the door with the government regulation that now makes drivers penalized with three years losing their license for a new bird driver and there is no more r I mean to say that he knows what I've done and his people from Hungary Lu and those are the three instances that I think the underlying maturity of uber could look for and find another 10 things that they have fought and worked for over the past two years as your company grows into a large mature global organization and each time you will find uber bringing people and knowledge to try to negotiate and move your company forward, in fact if you take a look they have hired david paulo who has worked in Obama's 2008 presidential campaign and was hired to help the company navigate the US government and help with the laws and engage with the government in dialogue on all things that would involve travel companies shares, that's a sign of a mature company, wait Wait a minute, as soon as we finished filming, we started editing it when we discovered that a headline had come to light.

Chan Zuckerberg's initiative hires uber pop adviser David Paula, in other words, Mark Zuckerberg takes David Paul out of uber, so it was still a great opportunity. good idea to hire david paul to deal with uber's regulatory affairs but unfortunately they've just been poached by another big company so we have to get back to this little day of news anyway let's get back to the case

study

, again, whether you're on the steps of capitol hill or just at city hall, there are lessons to be learned here as you run your business or build your small business tomorrow and dive into the ocean of disruption because as the two main points today said that the defenders of the status quo don't want change, they want all the benefits of technology and they don't want change to affect the way they do business and the second growth will bring a regulatory response one day and they will be ready to participate all and be flexible that's this week's case

study

hope you enjoyed it paul i need the pillow the pillow is ok the new al mohada this is thanks for seeing the value in taming it please subscribe we are on a mission to reach a million subscribers this year until next year i am thomas ors and i hope i left you better than i found you