I assume from your comment that you mostly agree with the perspective in the video - that Uber is predatory and evil for doing this. Though of course that assumption could be wrong.
The first time I watched I strongly disagreed with the perspective in the video. I thought about it more, watched the video again, and still disagree. Just from what’s in the video, which was the first I’d heard of the practice, it sounds basically OK to me.
I also think you already know about the main ideas I have that I think contradict the video’s perspective. Broadly capitalism, and more specifically facts about cars, common knowledge, and people’s life situations that may lead people to knowingly choose a ‘more expensive’ option rather than a ‘cheaper’ option. So I don’t think explaining why I disagree in detail will be helpful, though I’m happy to do so if you or anyone wants that.
I am interested in why you agree with the video’s perspective, if in fact you do agree with it.
Good meta guesses.
If you were Uber’s CEO, would you do it? Do you think it’s merely allowable or actually good?
I would do it if it seemed profitable. I think it’s actually good.
Which of these do you think are good or bad, assuming the facts given are accurate?
In general, do you think it’s profitable for a CEO to take actions that cause most literate Reddit user type people to hate your company, to cause negative TikToks about your company to go viral, etc? Do you calculate goodwill when looking at what actions are profitable, or ignore it since it isn’t measured in dollars?
Suppose hypothetically that the program was bad for most drivers who used it, but a fair amount of drivers signed up anyway and you could make a profit off them in the short term but not in the long term. Would that sound good to you? In other words, do you think it’s good business to offer people deals that are good for you but probably bad for them, and blame them for signing the contract if it’s bad for them? Or should you make an effort to not offer bad deals to people you do business with? Or should you offer them but only with very clear warnings that, let’s be real, Uber is not providing?
This one makes the program sound much worse than the video. I’m undecided if it’s outright predatory and evil, but I wouldn’t call it good.
One major way what the article describes is different from the video is that the video talked about rental whereas the article talks about (and describes terms consistent with) a lease.
Rental cars vs leased cars are typically different in things like flexibility to change, the contractual time period, penalties for early return, services provided, who is responsible for ongoing maintenance & repair, and who provides a substitute if the car breaks down. Rental cars typically offer their users much more value than leased cars do. This isn’t at all like the housing market, where “rent” and “lease” deliver approximately the same product to the end user.
I can imagine many more situations where an Uber driver would benefit from renting a car with unlimited miles at 4X the finance payment than I can where an Uber driver would benefit from a typical car lease at the same rate.
Definitely bad - fraud.
Bad. However I would guess this is more likely to be fairly typical corporate incompetence and assumption of correctness (not excusable, just typical) rather than deliberate policies to overcharge.
I don’t know. Part of the reason I don’t know is ambiguity/lack of knowledge on my part about the typical causal chain. Examples:
It generally seems bad to take actions which cause most users of your product to hate it, so they hate your company and post negative things about it on social media - some of which happen to go viral. In that case it’s just bad to take actions which cause most users of your product to hate it. The social media stuff is downstream of that and is an accurate signal that what you’re doing is bad.
It doesn’t generally seem bad to take actions which cause most users of your product to like it, but a few especially vocal people to hate that it exists (whether they’re actually users or not) and post a bunch of negative things on social media to try to get it withdrawn or banned. In that case the social media stuff is a tool being used by one group of people to limit the choices of another group.
There are other possibilities of course. And I don’t know what generally/typically causes bad social media.
I would consider goodwill or loss thereof in a profit estimate. Also as a tangent I think goodwill is measured in dollars at least some times.
I’d be looking to make deals that are good for both parties. I wouldn’t want a program that was always or almost always bad for the other party.
I think most edge cases involve deals that are sometimes good / sometimes bad for the other party. And it’s especially hard when whether it’s a good or a bad deal for them depends on factors that aren’t readily observable. That’s when it makes sense to rely on clear warnings and disclaimers.
omg, just found out 2 things:
- I thought Uber’s position was that the drivers are contractors working for Uber, not employees working for Uber. I (like many people including some journalists who have written articles about it) believed this was crap that pretty blatantly violates the law. After reading this thread, I now believe Uber’s position is actually different: the drivers are contractors working for the riders, not for Uber. And Uber does not pay the drivers anything – instead, the drivers pay Uber. Uber thinks it’s kinda like an appointment calendar (and payment processing) website service that these independent small businesses are using and paying for. Many of Uber’s business practices contradict this, like how it keeps control over the customer relationship. That makes it closer to etsy, ebay or amazon marketplaces.
- Many thousands of people are overpaying significantly on their taxes because Uber provides confusing information and doesn’t explain what’s going on.
Just thought of another common edge case: Deals that are good for the other party but worse than the other party could get if they were [better], where [better] could mean things like better informed, better negotiators, have better social connections, had more financial resources, etc.
Edit: better was not showing up due to the way I’d originally denoted it, so I changed how I was denoting it.
Why did you make guesses about the actual situation that are favorable to Uber? What they are doing is kind of like offering payday loans except without labelling them as payday loans, so they can lure in people who would never go to a payday loan place and don’t realize they’re getting such a bad deal.
I think you’re miscalibrated about what reality is like in a way that’s biased towards some sort of libertarian vision of “capitalism”. I think you tend to favor big companies instead of recognizing that most big companies today are corrupt af. We don’t have a free market and most of our big companies would not be successful in a free market.
Here’s an example that I find unsurprising:
Guy can’t do math, doesn’t have bad credit, has a minimum wage job, and is wondering if he should do the Uber leasing program to get a car in order to switch jobs to drive for Uber. Is that a good deal and an upgrade over his current job? Uber apparently did not explain under what circumstances the program might be a good deal or set reasonable expectations about it. He had to turn to reddit to find some people who know a little more math, and are more able to read fine print, to scream “NO DON’T DO IT”. Also Uber’s representatives were evasive about his questions, and he (rightly!) trusts yelly, anonymous redditors more than Uber’s representatives.
I wonder if you draw a distinction between sophisticated and unsophisticated counterparties in general, and think playing hardball (“we offered contractual terms we like; it’s up to you whether to accept”) with unsophisticated counterparties is broadly bad? One common thing that happens is unsophisticated counterparties assume good faith and good will, and that the numbers and details are reasonable … and then get exploited and go complain on social media that the company is predatory and evil. I think the companies, besides being predatory and evil, are also stupid to keep causing this mutually bad outcome (I’m very doubtful that the bad press is worth the money even ignoring morality).
I read it as deliberately selling sketchy, abusable data to collection agencies whose actions you would take no responsibility for even though you could predict in advance that, technically, they’d break some laws while also harassing and wasting the time of innocents whose only error was ever working for you.
You can skim the Uber drivers subreddit and quickly find out. There’s widespread negative sentiment.
If you think using clear warnings and disclaimers is the kind of thing Uber would plausibly be doing, then I think you’re miscalibrated about what our economy is like and what Uber in particular is like.
Broadly, being a better negotiator doesn’t help and it’s unfair to imply that it would. Why? Because Uber has some lawyers who play hardball and write biased contracts. But even if you’re good at negotiating, you can’t negotiate with them. You are offered “take it or leave it” terms. You can only speak to Uber representatives who don’t have the skill or authority to negotiate.
When many, many companies all offer shitty “take it or leave it” terms and won’t give you access to anyone to negotiate with, people become jaded, cynical, anti-capitalist, etc., and get angry when you say “if you don’t like the terms just work somewhere else. it’s a free market!” (where exactly is better in the low skill, privilege and social connections end of the economy!?). People also sign contracts despite objecting to and disliking some of the contractual terms because they need a job and don’t know where to turn to get a reasonable contract or a sophisticated boss/manager who can actually negotiate contract wording and terms.
Most people can’t act like their own lawyer and companies should give them reasonable options where they don’t need to. But even if you could negotiate well, it’s hard to fix anything that way because companies like Uber are unwilling to negotiate with you.
The video also said 220 a week is 880 a month. I didn’t think she was being careful with details, so when I heard “rent” I didn’t assume it was definitely a rental not a lease. In general, lots of people don’t know the difference between a car rental and a car lease, so I don’t expect them to get that detail right even when they are being more careful with their words.
Ok, you actually seem familiar with the fact that people don’t know the difference between car rentals and leases – you spent a whole paragraph explaining it, and ended with that.
It’s notable that, even knowing that people don’t understand the differences, you still assumed she was using the right word and definitely meant rental and NOT lease.
It’s also notable that you rounded down to 4X a month here – I assume you are talking about the numbers from the video. She said you could buy the car for $200 a month. So 4x that would be $800 a month. The monthly value she gave was $880, so 4.4X the finance payment she gave. And if you actually multiply out $220 a week, that’s $953 a month, which is 4.765X the finance charge.
It’s also notable that you assumed the rental was unlimited miles for you example. Not all rentals are unlimited miles.
You had multiple assumptions that all went in the same direction – that the girl in the video was wrong and Uber was right.
But an article says:
Uber claims that Xchange is not intended to turn a profit, but rather to increase the number of drivers available.
But I wonder why it was possible to sell if it wasn’t designed to make a profit. And also it did not make a profit:
Uber Technologies Inc [UBER.UL] said in September it was shutting down the auto-leasing business, which had heavy losses. Over the last few months Xchange Leasing has started to unwind the business, which was started to lease new cars to Uber drivers, selling cars at auction.
The net book value of Xchange Leasing’s more than 30,000 vehicles was roughly $400 million, according to The Wall Street Journal, which first reported the deal with Fair on Tuesday. The newspaper in August said that Uber was losing roughly $9,000 a car, 18 times more than previously believed.
Maybe it lost money because it was designed to make a profit by ripping people off that Uber lied to claiming it was just trying to enable access to Uber driver jobs (I mean contract positions for Uber … no I mean contract positions where you don’t work for Uber and you pay Uber), and that wasn’t actually a good business to be in.
Or maybe because it was only designed for very heavy drivers with awful credit, but it wasn’t marketed that way. People on reddit with good credit or who want to drive nights/weekends were asking if maybe the program was right for them.
I wonder what else they were doing wrong and what they needed 500(!) employees for (especially considering their lack of customer service). Maybe they just had no efficient way to sell the cars after the leases ended.
However, many Uber drivers complained of Xchange Leasing’s predatory practices, saying that exorbitant rates forced them to drive full time just to cover the cost of the car, with little or no profit left over.
This article has some other claims:
The thing you’ll need to keep in mind is that once you’re approved, you are responsible for finding your own vehicle. Remember to be patient and persistent in doing so. Being impatient in getting your car will exact a hefty premium on the price you pay and your overall driving experience. A lot of the game breaks down to finding the right vehicle for you based on the availability at dealerships.
Uber will only pay 105% of the lending Blue Book value to prevent price gouging and to ensure that prices for used vehicles remain sane.
Generally, cars that hold their value well (Honda and Toyota) will tend to sell much higher than their lending Blue Book value, and thus are much more difficult to get a hold of than used cars that don’t hold their value as well (Kia, Chevy, Hyundai).
Xchange Leasing is not the same as the BAMA or Santander leases; it is a separate entity and operation from Uber’s Vehicle Solutions. Just because you signed up for something under “Uber Vehicle Solutions”, that doesn’t mean you are on the Xchange Leasing program.
The program has changed over time (including after being sold) and also due to Uber’s misleading marketing, some people may have gotten other leases and believed they were using the Uber program.
I think both are true: I tend to favor big companies and I recognize that most big companies today are corrupt af.
Specifically regarding Uber, here’s what I think: Uber is corrupt and the only reason Uber exists is their successful exploitation of government corruption.
Details: For decades local governments pretty universally and ruthlessly suppressed small/independent taxi services in favor of politically connected big taxi companies who paid all manner of direct and indirect bribes to maintain an expensive quasi-monopoly with poor service in their area. Uber was a hack on that corrupt system enabled by creating another corrupt system: an invisible (and temporary) subsidy to riders along with promulgation of a plausibly deniable lie about the actual arrangement between the company, the drivers, and the riders. If Uber had remained small and local like other upstart taxi companies, the local government would have figured out a way to shut them down or turn them into just another part of the taxi monopoly. By getting big fast Uber took advantage of the fact that the corruption of taxi companies, while approximately universal, was also local and uncoordinated at levels much above a city/county. Localities can and have tried to ban Uber from their location or tax/regulate them into irrelevance, but they run into the problem that Uber itself continues to exist, enable a better-than-taxi rider experience elsewhere, and thus build demand for repeal of whatever local regulations were put in place. Or just outright flaunt/defy the local regulations until they’re shown to be toothless. Or hire way more lawyers than any local company ever could to obtain judicial relief. Or get another level of government to overrule the local government. And I’d be very surprised if Uber hasn’t payed plenty of direct and indirect bribes at both local and higher government levels too. I have no specific data on that & haven’t looked, it’s just my standard expectation about the way things work. So ya, corrupt af.
But also, I think the world is significantly better with Uber (and Uber’s corrupt hack) than it was before Uber came along and did what they did. I don’t think we were better off with the local government protected taxi monopolies. I don’t know how a non-corrupt company could have done what Uber did. I don’t know of any non-corrupt alternative that would flourish in the world as it is if Uber (and Lyft, which I haven’t talked about but think is also corrupt) just got its corrupt ass out of the way. I don’t think the girl in the video (and those like her) would have done something better in the world than Uber if Uber wasn’t around doing what Uber does. Etc.
I don’t see these ideas (Uber is corrupt af and the world is better with Uber in it) as being in conflict.
I do think it’s possible I’m miscalibrated on magnitude. Big companies like Uber could be way more corrupt than even I’m thinking. Their benefits could be way smaller than I think (or negative) even given the corrupt context in which they must operate. That’s plausible / wouldn’t surprise me.
Also I think I have bias in favor of people who I see as doing/accomplishing things in a market and against people who I see as complaining about things other people are doing.
Also I think despite recognizing significant corruption exists I have bias in favor of people with control over money and other resources. I assume acquiring & keeping resources indicates some degree of merit and failing to do so indicates some degree of failure.
You’re apparently failing to connect “Uber is corrupt” to making reasonable guesses about specific concretes and facts. Increasing the magnitude of the disconnected, unintegrated, unpracticed, unintuitive, unhabitual abstraction won’t fix this.
It’s also extremely unfair and unreasonable to be like “you didn’t build Uber or anything big, so your position on this specific matter is probably wrong”. You should look at the merits of the case, not how much you’re biased towards each side (and for the anti-Uber side, how much you’re biased towards a specific representative, despite the existence of many other people with different characteristics but similar conclusions).
That makes sense.
At least in the near term I think it’s better for me to focus on just having a more neutral attitude toward stuff like this. A strong opinion like I had wasn’t consistent with the amount of knowledge I had, whether it was agreement or disagreement. And I really wasn’t interested in the details enough to go look for them.
“Note: there is no such thing as self-violence; you may make a mistake, but being able to act on your own bad ideas is part of your freedom to think for yourself.”
I agree that the terms of the Uber leasing program sound like they are predatory. People who disagree with predatory business practices are free to not support Uber and use another option for transportation.
Have you written about this anywhere else in more detail? Why do you think most of our big companies would not be successful in a free market?
No they aren’t. The government heavily suppresses available transportation options.
I’ve talked about other examples, besides Uber, e.g. Twitter’s deplatforming and fraud.
Some examples might not even need commentary for you to agree, e.g. Comcast.
Last I heard, Tesla is by far the largest automaker by market cap
Just look around at the world. Which big companies are very good? And aren’t heavily entangled with government?
I think there are plenty of big companies which are very good at generating returns for their investors. The government is set up in such a way that part of an optimal strategy for generating returns is becoming “heavily entangled” with government. I don’t think that implies the companies are bad, they’re only playing the hand they are dealt.
If government power were scaled back such that there was little to no benefit of becoming “heavily entangled” with government then companies would adapt and find new ways of generating returns for investors.
You didn’t name any companies or share any knowledge about why you think their leadership is flexible, adaptable and rational.
Have you read Atlas Shrugged?
I wouldn’t be able to do that. I think leaders at any given company probably have a lot of errors in their ideas and would benefit from reading some of your articles.
I will say that Amazon has done a good job with AWS and Microsoft has done a good job building their cybersecurity practice. I’m sure they are heavily entangled with government though.
I haven’t yet. I have read a short essay by Rand that you recommended to me a few months ago.