When I first discovered Uber cabs I was, to put it mildly, ecstatic. It seemed like a gift sent from heaven above, a simple, brilliant idea that changed the way we went from place to place. No more stressing about not getting taxis, haggling with autowallahs, drivers going to the village for months on end, wondering how to get around in a strange city...
Safe, comfortable, convenient... when I need a taxi I look at theUber app on my phone and it shows me little pictures of all the taxis that are available around me on a map. I click on a button and find out exactly which model car it is, the name of the driver, and how many minutes until the taxi will arrive to pick me.
When I reach my destination I simply step out of the taxi and walk away. Payment is made directly from my credit card and I receive an invoice, completely avoiding the hassle of paying cash, haggling for change (somehow taxi drivers never have seem to have change)... Brilliant.
I was so enamoured that even after the Delhi Uber rape incident I couldn't help but be defensive of Uber... it's an accident, a coincident, at least it's not really Uber's fault...
We've all heard some great things about Uber - the genius tech startup - an epitome of technological innovation and capitalist idealism. You probably know that Uber is valued at an impressive $40 billion. They rung in the new year with 2 million rides, in over 250 cities, and have only been in existence for 5 years!
But did you know they are also facing lawsuits from other cab companies, their own drivers, and their customers?
They faced bans in Spain, Thailand, and New Delhi and hit regulatory hurdles in places like Germany, the Netherlands, and their home state California.
They have been accused of mistreating their drivers and in fact one driver reports it would be better to get a job at McDonald's then become an Uber driver.
They have been accused of misusing customer data and revealing personal information of Uber users at a party for entertainment.
Overcharging customers, even in times of crisis. According to this source, their surge-pricing mechanism, which raises taxi fare based on demand, was turned on when people were fleeing a hostage scene in Sydney, Australia.
And worse, after all the cases against Uber drivers of sexual assault and even murder, they introduced a safe-ride fee of $1 which customers have to pay so Uber can conduct safety training.
You would think customer safety would be a primary concern for a company that essentially creates a system where people travel with complete strangers, and not an after-thought, or a way to extract more money.
When I was at university I took a course in social entrepreneurship. Social entrepreneurs start businesses that they believe have a sense of purpose beyond money, that tackle social issues and contribute to society.
My professor defined 'social entrepreneurship' as businesses with two bottom lines - financial profit is one, and goodwill or social use is another. So to measure the success of a social venture you would ask two questions - what was the profit generated? And how socially useful was it?
I was a little surprised to hear this definition. I had thought all businesses would naturally be focused on two bottom lines - money and people.
But the Uber story reminds us that that's what businesses sometimes do. Focused on one bottom line, driven by greed, they form uber efficient, high-growth businesses that sometimes forget to focus on people. And even though that might seem like a great short-term strategy for growth, that is not sustainable in the long-run.
When you are starting up your own innovative venture... whether a nonprofit venture or a for-profit one... here are a few lessons you can borrow from the idealism of social entrepreneurship for more meaningful, sustainable success.
Be People-Centered:
I once wrote an article where I said:
| Every job that every person does, is really about other people. Everything a manufacturer makes, a chef creates, a writer writes, an accountant counts, a cleaner cleans... it's all done for the sake of somebody. It fills a need, adds value to a life, and brings smiles. |
The customer is the person you are doing everything for. Your raison d'etre ... the reason for your existence.
As Henry Ford pointed out, 'It's the customer who pays your salary.' The customer can't be a mere afterthought - because he will make or break you.
If Uber had taken customer safety into account, they would not be facing a class action lawsuit today. If they had considered their drivers as their partners and cared for their welfare - they would have generated a lot more loyalty and goodwill.
The Tata Group is an example of a people-focused business empire. It states its purpose clearly - and it's not about providing energy, or steel or selling cars. It says:
At the Tata group we are committed to improving the quality of life of the communities we serve.
And they do whatever it takes to fulfill their purpose, they create value for all their stakeholders - including customers and employees, and they make sustainable profit as well.
Begin your startup with two bottom lines - the people and the profit - and let it reflect in your company's culture.
Have a sense of purpose:
Social entrepreneurs are passionate about resolving a social issue - poverty alleviation, clean water, green energy, etc. They are clear that their mission is to fill a gap that society needs. Their ventures are founded on that purpose, and it keeps them grounded.
Businesses on the other hand tend to start with the question, what can I do to make money? Instead, if you can start with a focus on providing a service where one is needed, your judgment won't be clouded by the profit angle, helping you streamline your efforts to become successful. And when you are successful, the money will follow.
Uber found a need it wanted to fill. They identified the very real and global need of an easier way of getting taxis. And they found a brilliant solution. But they got sidetracked by cutting down their competition, and raking in the cash, and ended up facing a lot of hurdles.
Protect your integrity:
To stay ahead of their competition and push them out of the market, Uber allegedly gave their drivers in New York anonymous cell phones to order and then cancel rides from their competitors, and put in place an elaborate campaign to steal drivers from competitors.
Poaching is a fair extension of free-market capitalism, but trying to destroy the competition and establish a monopoly...? Not illegal maybe, but certainly, unethical.
Make money - by creating an amazing product, exploring innovative marketing strategies, providing stellar service... But don't get so hung up on the profit that you forget what the world needs. Don't get so busy cutting out competition and stealing the market that people forget how amazing you are and begin focusing on how immoral you are.
Luckily Uber is adaptable and open to change. They started 2015 with a focus on changing its image to 'a smarter and more humble company that sets new standards in data privacy, gives back more to the cities we serve and defines and refines our company culture effectively,' according to CEO Travis Kalanick. If it truly can change the way it works, its popularity could still soar to phenomenal heights.
When you are starting up your venture, keep your social responsibility in mind. Not just for the sake of your integrity, but also because it can be profitable - it will make you attractive to investors; you will inspire loyalty in your customers, your employees, and all your stakeholders; and most importantly, you will have remained true to yourself.
As the practical preacher Ralph Sockman said:
What makes greatness is starting something that lives on after you
In the startup series, we encourage you to go out there and start a venture of your own. Today, I exhort you to consider this: What would you rather have live on after you - a company that is despised for its heartless profiteering, or one that has successfully balanced the two bottom lines: the people and the profits?
The above is from the Newsletter I receive from Equitymaster.
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