Have you been watching the unfolding disaster that is Uber’s public relations lately?
It’s an ugly story. There are accusations of mistreatment of drivers, passengers, software engineers, and even other members of management. Perhaps ugliest are the allegations of sexual harassment.
The scandals have become so bad that, in a bid to clean up the company’s image, CEO and founder Travis Kalanick has resigned. However, Kalanick will reportedly stay on as a director on Uber’s board.
This came after footage emerged of a heated argument between him and a driver, while Kalanick was riding as a passenger.
Meanwhile, accusations of sexual harassment in Uber HQ have come from so many sources that they’re impossible to ignore.
Uber recently fired 20 employees following an investigation into its workplace culture. The company has been trying to clean up its image. But even that response is lacklustre, as new scandals seem to break every week.
We’d forgive you if you found it all a bit distasteful, and had long since stopped paying attention to the headlines.
But anyone holding Uber’s private shares hasn’t had the luxury of looking away. According to the New York Times and CNN, it was pressure from five major shareholders that led to Kalanick’s resignation.
Aside from the obvious lesson — that management should avoid scandals — what can investors learn from this mess?
In a world where every smartphone has a high definition camera, it’s impossible for companies to hide a toxic culture.
Out of court settlements can cost a company money and bad press. But nowhere near as much as the cost in public opinion from a single leaked video of bad behaviour.
It’s just too easy to share a video or news article on social media. That spreads the story to all of your friends. Many of them will then share it on their own feeds. And so on.
The same connected smartphone culture that made Uber’s business model possible, ensures that bad press spreads through its customer base like wildfire.
The millennial demographic were quickest to try Uber. We grew up with the internet. Many of us owned smartphones before we were adults. We certainly aren’t afraid to try new tech.
Uber’s perfect customers. It’s cleaner, safer, and cheaper than a taxi. And seemingly overnight, Uber was everywhere.
But that same demographic is also very quick to switch to a competitor if they become disillusioned. While Uber may have been the first to break out into this space, their model isn’t hard to replicate.
Plenty of rival ridesharing services have popped up in the last several years. And that’s not to mention old-style taxi companies. Many of those have been trying to improve services and incorporate new tech.
Despite Uber’s many controversies, they still hold a dominant position in the ridesharing economy — which they almost singlehandedly created. Rivals like Lyft don’t have anywhere near the international reach or the brand recognition of Uber.
With speculation rife about an initial public offer (IPO) of Uber shares, potential investors have a decision to make.
Do you believe Uber can overcome its many scandals, and continue to grow in the future? Or, is there too much mud to shake off, and Uber’s best days of growth are behind it?
Moments like these are when I turn to our technology editor, Sam Volkering. Readers of his premium newsletter, Revolutionary Tech Investor, have been following stories like Uber’s for years.
Uber hasn’t been available to retail investors so far. But when an IPO does eventually roll around, it’s Sam you want in your corner, telling you why you should tip in some speculative cash…or not.
One of the revolutionary tech stories that Sam has focused on is the rise of digital currencies such as bitcoin and ether. Much like ridesharing apps, cryptocurrencies have been fraught with scandals, scams, protests, and legal actions. And we’ve seen plenty of both hype and criticism from the media.
However, much like ridesharing apps, cryptocurrencies have seen incredible gains. And this could be just the beginning.
How do you get a shot at those incredible gains, and avoid the traps? How do you know if it’s too late to invest, or the perfect time?
You need a guide. Someone who spends every waking moment soaking in tech news, and analysing the companies behind it.
So if you’ve got a little money you can afford to put into a speculative punt — whether on cryptocurrency, a controversial ridesharing company, or whatever the next big tech revolution is — check out Revolutionary Tech Investor.
You can find Sam’s latest special report, with more details, here.
This week in Money Morning
Greg opened the week with a look at the most talked about story on the US market, Amazon’s bid to purchase Whole Foods. At the same time that the US’ leading online retailer was buying a bricks and mortar company, the US’ leading bricks and mortar retailer was buying into the online space. Greg compared the two rivals, and discussed why the market is bidding up one and not the other. Is Amazon’s tremendous six year run about to end? Greg explains the warning signs to watch for here.
On Tuesday Greg wrote about where Australia’s economic growth will come from when we can no longer simply sell commodities and turn that money into housing. Greg feels that technological advancements from the past decade are finally reaching the point where they can create real productivity gains for the economy.
Economic growth in Australia is unlikely to be as strong over the next 25 years as it was for the last 25. But that doesn’t mean we have to live in fear of another global financial crisis. For Greg’s argument on why, you can read Tuesday’s Money Morning here.
Oil sold off again midweek, and sent volatility roiling through markets. In Wednesday’s article, Greg looked at a rough rule of thumb you can use to understand commodities. To see why this indicator is flashing a warning sign for oil, and Greg’s discussion of what that means for the broader stock market, check out Wednesday’s article here.
Sam also touched on Amazon’s bid to purchase Whole Foods this week, though he took a wholly different angle. Sam looked at some of the painfully misguided headlines flying around the internet. As he said, it’s important to be informed and understand an issue before you put pen to digital paper. To read his explanation of what too many are getting wrong, you can read Thursday’s Money Morning here.
And on Friday Sam looked at what a decade of political instability has done to Australia’s economy, international image, and share markets. For a look at how you can opt out of the manipulated, distorted markets, and the central authorities distorting them, check out Friday’s Money Morning.
That was the week from your Money Morning editors. Enjoy your weekend, and you’ll hear from us again Monday!
Editor, Money Weekend