Skip to main content

Can Uber justify its high-flying value?

By Martha Pease
updated 11:25 AM EDT, Tue June 17, 2014
STORY HIGHLIGHTS
  • Cab drivers in London protested the mobile cab app Uber, tying up traffic
  • Martha Pease says Uber, valued at $18 billion, has to live up to consumer expectations
  • She says the company needs to provide more transparency on passenger ratings
  • Pease: Uber should explain to consumers why disruption in taxi business is good for all

Editor's note: Martha Pease is CEO of DemandWerks.com, which advises companies on strategy. The opinions expressed in this commentary are solely those of the author.

(CNN) -- In the blink of an eye, Uber has emerged as one of the most esteemed companies in the United States, soaring in recent days to a market value of $18.2 billion. That's bigger than Hertz and Avis combined. But is the Uber story really as good as it seems?

Taxicab drivers clogging the streets of Europe this past week, protesting against Uber, are only part of the challenge. Far more dangerous could be an emerging pattern of not paying sufficient respect to customers.

Companies like Apple, Zappos, FedEx and Amazon are passionately committed to building a love affair with consumers as the center of their universe. In contrast, Uber has embraced a take-it-or-leave-it approach that may be tough for consumers to swallow over the long haul.

Martha Pease
Martha Pease

Still, the business model is brilliant, the growth eye-popping and the initial Uber experience is generally excellent. In big cities like New York, on a rainy night, when cabs are always full, finding an Uber car quickly through your iPhone can be a godsend, even though you may have to pay a "surge price" at a multiple of twice or even more of the regular price. This adds up to Uber being a welcome disruption, blowing competition and free market pricing into the regulated taxi industries that don't always serve the interests of consumers.

So what are the dangers? Lack of transparency may be one. Consumers usually want a company to be proactive about explaining what they do and how that can affect their lives, especially when physical safety is at stake. Uber puts most of the meaningful detail on what service it actually provides into its Terms & Conditions, which most people don't read when they download the app.

Uber protests in Europe
Outrage: Uber & Lyft banned in Virginia
Uber expansion

According to its Terms & Conditions agreement, Uber is not a transportation service. It's a passenger procurement service for private car drivers. The car drivers are Uber's actual customers.

Lack of accountability may be another danger. The entire risk of using the service is on the passenger. You are warned that you could be exposed to situations that are "potentially dangerous, offensive, harmful to minors or unsafe". Surprisingly, Uber does not claim to "assess the suitability, legality or ability" of any third party providing services procured through Uber, and UberX drivers may not be professionally licensed or permitted.

Does all this mean you may have a hard time suing the company if your driver is negligent and you get hurt? Lane Kasselman, Uber's spokesman, didn't directly address this question of liability when I asked him about it in an email, but points to company attention to passenger safety, noting Uber is "the first to ensure end-to-end insurance coverage for ridesharing."

Privacy is also a concern for consumers. As we saw with the fallout from the Target data security breach (which included the CEOs resignation), people expect a company to protect their privacy. I am sure there are fellow riders who, like me, take issue with the company not disclosing their passenger rating in the Terms & Conditions or privacy policy for the app.

To me this raises further concerns: what are Uber's rating criteria for passengers, what happens to the data , how can I see the data on me, what's the dispute process if I disagree? Uber's Kasselman answered by writing "Rider ratings are available easily by visiting t.uber.com/support or just by asking your driver." Sounds fair enough, but on their support site I was asked to submit an email request for my passenger rating and wait for a response. (I did receive it Monday afternoon.) And, again, I may not be alone feeling more than a little uncomfortable asking my driver for my rating. Uber's blog says it is "exploring ways to show the rider's rating in the next generation of the app".

In addition to the security of corporate data, there is the issue of whether individual drivers have access to personal passenger information and how Uber protects riders from unauthorized breaches. When asked about this in an email, Kasselman, responded: "Uber driver partners do not have access to any personal information through the platform, including credit card data. We use state-of-the-art anonymization technology, meaning the driver doesn't keep a record of the rider's phone number. Drivers and riders are able to connect either by calling or texting, with the anonymization described above, in place." From a logical standpoint, this makes sense, but from a brand standpoint they have yet to tell me that protecting my safety and privacy is crucial.

And then there's change. Consumers both love and fear disruptive companies like Uber. People know that innovative companies create constructive chaos that usually benefits consumers. But disruptive companies can also be seen as dangerous.

For Uber to get the value of its disruption, in the form of consumer goodwill, people will need to know why Uber-instigated changes in the taxi industry are good, not bad.

Despite the surge in rider sign-ups during the European taxi driver protests last week, Uber's challenge will be answering the same questions raised here, as more and more new people come online to use its platform. But the taxi driver action also creates the perfect context for Uber to explain why shaking up the regulatory environment -- and the ensuing mess -- is a good thing for both consumer and regulator.

If I were advising Uber on how to best achieve revenues that would justify its $18 billion valuation, I'd focus on two things.

First, get very sharp about what you stand for and start building bridges with consumers that go beyond the functional role of delivering things from point A to B. Rise above the kitten delivery stunts and bull-in-a-china-shop attitude to establish the value of your company in consumers' lives. That suggests being more transparent, protective, inclusive and explanatory about your business and the impact of your actions on their safety, privacy and overall riding experience.

Second, turn the negative fallout from disruption -- from forcing Uber's model on municipalities and shaking up the status quo -- into a positive global movement. Explain to the entire ecosystem of drivers, riders, regulators, regulated, investors and employees the value and benefit of the turmoil Uber brings when it rolls out in new markets.

Investors have spoken, and they're all in for Uber. But the jury may still be out with consumers. I happen to love Uber. But if Uber doesn't seize this moment to build a valuable, trusted position in my life, and move beyond the emerging dangers, I will become a consumer who is confused about what it stands for.

This requires Uber to develop a true brand to manage its disruption and take control of the conversation with consumers. It must bring context to the chaos it creates and be known as a positive force for change that always acts on behalf of its consumers, not its business model. Otherwise, down the road, a competitor might more easily turn my head: one that delivers exactly what they promise me.

Follow us on Twitter @CNNOpinion.

Join us on Facebook/CNNOpinion.

ADVERTISEMENT
Part of complete coverage on
updated 8:21 AM EDT, Mon September 1, 2014
Carlos Moreno says atheists, a sizable fraction of Americans, deserve representation in Congress.
updated 12:25 PM EDT, Sun August 31, 2014
Julian Zelizer says Democrats and unions have a long history of mutual support that's on the decline. But in a time of income inequality they need each other more than ever
updated 12:23 AM EDT, Sun August 31, 2014
William McRaven
Peter Bergen says Admiral William McRaven leaves the military with a legacy of strategic thinking about special operations
updated 12:11 PM EDT, Fri August 29, 2014
Leon Aron says the U.S. and Europe can help get Russia out of Ukraine by helping Ukraine win its just war, sharing defense technologies and intelligence
updated 1:24 PM EDT, Fri August 29, 2014
Timothy Stanley the report on widespread child abuse in a British town reveals an institutional betrayal by police, social services and politicians. Negligent officials must face justice
updated 9:06 PM EDT, Fri August 29, 2014
Peter Bergen and David Sterman say a new video of an American suicide bomber shows how Turkey's militant networks are key to jihadists' movement into Syria and Iraq. Turkey must stem the flow
updated 11:54 AM EDT, Mon September 1, 2014
Whitney Barkley says many for-profit colleges deceive students, charge exorbitant tuitions and make false promises
updated 10:34 AM EDT, Fri August 29, 2014
Mark O'Mara says the time has come to decide whether we really want police empowered to shoot those they believe are 'fleeing felons'
updated 10:32 AM EDT, Thu August 28, 2014
Bill Frelick says a tool of rights workers is 'naming and shaming,' ensuring accountability for human rights crimes in conflicts. But what if wrongdoers know no shame?
updated 10:43 PM EDT, Thu August 28, 2014
Jay Parini says, no, a little girl shouldn't fire an Uzi, but none of should have easy access to guns: The Second Amendment was not written to give us such a 'right,' no matter what the NRA says
updated 1:22 PM EDT, Sat August 30, 2014
Terra Ziporyn Snider says many adolescents suffer chronic sleep deprivation, which can indeed lead to safety problems. Would starting school an hour later be so wrong?
updated 9:30 AM EDT, Fri August 29, 2014
Peggy Drexler says after all the celebrity divorces, it's tempting to ask the question. But there are still considerable benefits to getting hitched
updated 2:49 PM EDT, Fri August 29, 2014
The death of Douglas McAuthur McCain, the first American killed fighting for ISIS, highlights the pull of Syria's war for Western jihadists, writes Peter Bergen.
updated 6:42 PM EDT, Tue August 26, 2014
Former ambassador to Syria Robert Ford says the West should be helping moderates in the Syrian armed opposition end the al-Assad regime and form a government to focus on driving ISIS out
updated 9:21 AM EDT, Wed August 27, 2014
Ruben Navarrette says a great country does not deport thousands of vulnerable, unaccompanied minors who fled in fear for their lives
updated 9:19 AM EDT, Wed August 27, 2014
Robert McIntyre says Congress is the culprit for letting Burger King pay lower taxes after merging with Tim Hortons.
updated 7:35 PM EDT, Tue August 26, 2014
Wesley Clark says the U.S. can offer support to its Islamic friends in the region most threatened by ISIS, but it can't fight their war
updated 4:53 PM EDT, Tue August 26, 2014
America's painful struggle with racism has often brought great satisfaction to the country's rivals, critics, and foes. The killing of Michael Brown and its tumultuous aftermath has been a bonanza.
updated 3:19 PM EDT, Tue August 26, 2014
Rick Martin says the death of Robin Williams brought back memories of his own battle facing down depression as a young man
updated 11:58 AM EDT, Tue August 26, 2014
David Perry asks: What's the best way for police officers to handle people with psychiatric disabilities?
updated 3:50 PM EDT, Mon August 25, 2014
Julian Zelizer says it's not crazy to think Mitt Romney would be able to end up at the top of the GOP ticket in 2016
updated 4:52 PM EDT, Mon August 25, 2014
Roxanne Jones and her girlfriends would cheer from the sidelines for the boys playing Little League. But they really wanted to play. Now Mo'ne Davis shows the world that girls really can throw.
updated 5:04 PM EDT, Mon August 25, 2014
Kimberly Norwood is a black mom who lives in an affluent neighborhood not far from Ferguson, but she has the same fears for her children as people in that troubled town do
updated 5:45 PM EDT, Fri August 22, 2014
It apparently has worked for France, say Peter Bergen and Emily Schneider, but carries uncomfortable risks. When it comes to kidnappings, nations face grim options.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT