the reasons for the crisis of a billionaire business

the reasons for the crisis of a billionaire business

For years it has been the symbol of the galloping economy of new internet services. A revolution, a perfect intermediary capable of offering new job opportunities and an easy and necessary service for many users. Uber it had been a revolution, the first bulwark of a web ready to break the world and change everything.
Years have passed and today that same company is not doing very well, amid sexual scandals, counting more and more in the red and big cities ready to say goodbye to its services. Is the end coming or will the free taxis of the web survive even these hard blows?

The latest scandals

Let's start from the end. In recent weeks, Uber has published a significant safety report that self-declares further 3000 cases of aggression during his races. Nine people were murdered, 58 died from road accidents. Alarming figures, albeit to be reduced due to the very low percentage impact on the total number of trips made in the USA, approximately 1.3 billion in a year. However, these are numbers that should not be underestimated, especially if combined with the approx 6000 cases of sexual assaults of various kinds between 2017 and 2018 and the not-so-rosy period that the US company is going through.
The data, capable of further damaging Uber's image, were published following accusations of low security for users who use the app. A way to heal in some way a relationship of trust that has failed and which is likely to represent another problem for the many that the company has been facing in the last period.

The London case

The publication of these data also explains in some way the choice of the city of London which, at the behest of its mayor, has decided to revoke the license from Uber. The reason, in fact, is to have encountered during the races a series of abuses and incorrect conduct between the end of 2018 and the beginning of 2019: the accusation is that of undermining the safety of Londoners who use the app for their journeys.
According to the London municipality, the failure to license many Uber drivers and curricula not up to par would not be able to give just value to what, in all respects, is considered a public service. London holds Uber directly responsible for the situation, denouncing further 14 thousand illegal races in just under eight months. The company immediately appealed, but the farewell to London could represent a significant damage to the image, as well as a rather large loss of revenues.
Furthermore, all this could open a precedent capable of involving many other cities, ready for anything in order to get rid of an app that has never been frowned upon by public institutions and category workers.

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Accounts alert

11 billion of turnover and an exchange value of over 70 billion dollars. Numbers that seem to speak of a company in full health and expansion, but which hide a far more disturbing reality, that of very high and dizzying daily losses and of an apparently perfect business model that does not pay for itself.
Over the years Uber has managed to expand thanks to large investments by large companies and small and medium savers: everyone believes in the bet of this small company that has become large, but how long can all this game still be fully sustainable? According to the Business Insider data, in terms of liquidity, the company would be positive for 11.6 billion dollars; despite this, between 2014 and 2018 Uber burned on average a figure close to 2.4 billion dollars per year.
Only in the first part of 2019 was the loss of 6.5 billion, 1.1 billion dollars burned in a month, almost 37 million per day, then reduced after costs to approx 16 million per day. Analysts have made it clear: without reversing the course and despite the high capital register, with losses of this magnitude, Uber would only remain 24 months of life before filing for bankruptcy.

What's wrong

If turnover is the only positive note, many are wondering what the real problem is in Uber's accounts. The real sword of Damocles on the company seems to be, mainly, its now unsustainable business model, capable so far of holding thanks to external investments but which in the long run could break a rather fragile thread from the outset. Uber, in fact, would lose on average about $ 0.60 for each run made. Everything, in the initial plans, had to be resolved over time with the gradual replacement of the drivers with self-driving cars, but the process, also considering the various problems and accidents, is proving to be much longer than expected.

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Workers' rights

The fixed costs of the drivers, the real problem of the company, are already starting to bring to light many other problems. Uber workers, freelancers who are not hired, are starting to ask for a regulated employment relationship, a higher wage and more rights, a fair-faced cat. The strikes continue to arrive in many cities in the US, with drivers who earn less and less, are forced to do more and more hours and ask the company for a minimum wage to arrive, claiming that their condition is finally regulated by contract for what is a real job for them, despite the company for which they invoice does not consider it such.

The requests are from $ 28 the hour against the 18 that they currently perceive, the only solution to avoid ever longer and exhausting shifts that many drivers undergo to achieve the wages they desire, with all the consequent public safety problems that this entails. Uber has for now blocked the licensing of new drivers in the United States but in California, the real center of protests, a law is being prepared which provides for a minimum salary, sick days and the possibility for workers to create their own union.
If everything were to take effect, a cascading effect could be triggered, which should not be underestimated in the rest of the United States first and then in the world.

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And now?

The paradox of Uber it is so before everyone's eyes. The company launched the perfect business model, giving many users an indispensable and comfortable service, without intermediaries, easy to use, useful for any eventuality and present in every part of the world. He created work for many people and created a working model that, despite the undeniable distortions, created work for many people.
The company has been a pioneer in many fields, launching a web service that has made school and trying to make it evolve and enter the future even before it took hold. Yet she finds herself gasping, submerged by ever larger debts and by problems and controversies capable of bringing down anyone. but yet Uber they are still there to engage in the attempt to grow and emancipate themselves definitively, to show everyone that they are not just a bubble ready to explode, but a reality capable of resisting the weather and the harsh test of time.


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