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Airbnb, Uber and problems with the digital-sharing economy

Matt Weinberger | Nov. 6, 2014
Sharing isn't always caring.

Uber didn't quite go as far as giving drivers stuffed facial hair, but in 2012, it launched the UberX program, a lower-cost service for those who similarly wanted to turn their own cars into cabs. From there, the competition between Uber and Lyft has gotten incredibly intense: When Lyft cuts prices, Uber cuts them further. Both companies can afford to take losses thanks to heavy venture capital investment (Uber has taken in $1.2 billion thus far; Underdog Lyft has raised $332.5 million); it's just about getting people to take rides with its drivers.

In short, Uber is willing to do anything to keep growing, and isn't afraid to dip into its deep pockets to do so. Which is why it has been at the center of a few ethics scandals in recent months: From brand ambassadors taking Lyft rides just to recruit drivers, to phoning in phony ride requests to Lyft to jam their dispatch, to claiming that its drivers make six figures while actively cutting their commissions, Uber seems to have very few scruples when it comes to wrecking the competition and building its fleet. 

Which is why it's sad, but not unsurprising, to read the Valleywag report that Uber is pressuring its UberX drivers into buying fabulously lavish vehicles that they can't really afford with subprime loans offered by its partners. See, Uber doesn't really  care if drivers are stuck with shady loans that would essentially force them into "indentured servitude" to the company, as long as Uber has drivers with nice vehicles working for them and not the competition. Drivers sign up because Uber promises them the world, and when they don't make as much money as they say -- well, someone has to pay for this nice new car.

Sharing doesn't scale
There are other sharing economy startups that let you share anything from boats to scooters to office space. And while on the surface, that economy seems to be a great way to give friends and neighbors a little extra cash for the things they aren't using, remember that these businesses are still businesses, and that money doesn't always go where you'd hope or expect it to.

Silicon Valley's classic problem is about scale: How do you take a good idea, and make it really, really big? For a pure technology company, that's easier than it used to be. Just throw a cloud at it until you have enough computing capacity to figure out the next move. 

That doesn't work so well once people enter the equation. People have livelihoods and interests and opinions. Paying a friend $10 for a ride has virtually no global impact. But when 10,000 people pay 10,000 friends for rides, that's a pretty big ripple. Everyone has to remember that value doesn't just appear from thin air. Everything has its cost somewhere down the line, whether its in inadvertently shoring up housing prices, causing a security risk in an apartment building, or making a driver work extra hours because you went for a car with the lowest rate.

 It just isn't as simple as sharing and playing nice.

 

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