Opinion: Would you, should you invest in Uber?

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The risk and uncertainty of generating consistent, reliable income is borne by the driver. In Uber’s version of the sharing economy, it is sharing the risk, but not much of the reward. In order to put the customer first, there is a cost to how drivers are treated. It makes me wonder whether Uber’s model would be sustainable and affordable if the decision-making around accepting rides was more fair and symmetrical.

On October 28, 2016, an employment tribunal in the UK ruled that Uber drivers are to be classified as employees and be entitled to workers’ rights such as minimum wage and holiday pay (Uber is appealing this ruling).

It’s a significant shift in the global logistics company’s business model and increases the costs of its supply chain. This may be viewed as an interim inconvenience and further motivates Uber to roll out its self-driving fleet, which is currently being piloted in Pittsburgh, Pennsylvania.

To customers who care less about the ethics or business culture of a company providing a convenience product, the employee versus contractor issue and potential move towards self-driving cars that would put drivers out of work, may not matter at all in their purchasing decision.

However, these factors may make customers and investors, who do care about the long-term sustainability and impact of a company’s business model or care about workers’ rights think twice about their decision to use Uber or invest in it or similar companies.

Industry Alternatives

Our Role & Responsibility as Investors

As an impact investor, it is not enough to just look at the potential positive impact or improvement in access to essential resources that may result from the value proposition or for the customer alone.

We must also look at where else in the business model people are impacted – positively or negatively. We should be considering what the costs and benefits are to other stakeholders such as partners, suppliers, employees, the community, the planet, and future generations.

We cannot deny that technology is advancing and that for the most part, we all benefit from the progress. However, the rate at which technology is being developed to make our convenient lives more convenient is outpacing the development of infrastructure, services, and training to equip people who get displaced. In many cases, customers may not see past their immediate need to care enough about how the demand is being met, at what costs, and who bears those costs.

As investors, we should be looking further into the future and broadly because solutions of today may give rise to problems of the future – that may or may not be solved easily with investment.

Sustainable solutions are certainly less risky to investors compared to short-term gains. To accomplish sustainable, long-term returns, we should be investing in businesses that demonstrate a culture of “taking care of the village” and that reflect a longer-term perspective.

Uber doesn’t exhibit the culture of “taking care of the village”. As an impact investor, I would rather invest in a company that treats its employees and suppliers fairly. When customers ask why they should care about the ethics or fairness in the supply chain, I say it’s going to affect us in the long run.

Even if the detrimental effects of an unethical or unsustainable supply chain isn’t fathomable in our own lifetime, I do care about what kind of future we’re leaving for generations to come.

If you have the opportunity to invest in the next Uber, look beyond the convenience they provide to customers and deeper into the fairness and sustainability of their supply chain, hiring policies, and business culture.

When it comes to ridesharing, as investors, we can put our investment dollars to work to help the industry be more ethical and sustainable by investing in the companies that treat their drivers more fairly or gave them a stake in the business so that they too can take advantage of the benefits and gains in the industry.

 

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