Uber has always considered itself a disrupter, and the company’s announcement that it had acquired dispatch systems provider Autocab has certainly disrupted the equilibrium of the fragile, taxi and private hire business. In a sector weakened by the ongoing effects of Covid-19, the deal has been the equivalent of a hand grenade in a crowded room.
The reactions have been predictably hostile – after all, Uber has not spent the eight years since it launched in the UK making friends within the sector. Instead, it seemed to have firmly established itself as the enemy – a low-cost, tech-enabled predator out to steal your business.
Suddenly, overnight Uber has changed its message. Now, Uber wants to be your partner. It wants to offer you work and use established private hire and taxi firms to take on Uber jobs in towns where it does not operate, rather than setting up a local Uber operation. Sounds great – but why should we believe that this is the new reality?
Jamie Heywood took over as Uber’s European head in 2018. Formerly with online retail giant Amazon, he’s one of a new breed of experienced e-commerce managers who have replaced Silicon Valley techies in key jobs at the company since former Expedia boss Dara Khosrowshahi replaced founder Travis Kalanick as Uber CEO in 2017.
Heywood is adamant that the Autocab move signals a change in approach at Uber, and that the Autocab deal represents a permanent change of approach. He even describes Uber’s original approach of opening its own operations in other towns as “our previous model” – pointing out that the last time Uber actually moved into a new town with its own operation was in 2016.
“It does mark a change. I joined Uber just over two years ago and one of the things I’ve tried to change is that we listen more, be more respectful and more humble. Part of that is partnering with taxi and private hire operators. We are changing as a company. I hope we’re a bit less brash than we were, a bit more humble and more willing to listen. My commitment to Professional Driver readers is we do want to hear their concerns and I will try and be as frank and honest as possible in answering them,” he said.
“It’s been almost four years since we launched in a new city, and we currently have no plans to launch with our previous model in any more. I can see a world where almost all the future expansion with Uber, particularly in the UK, will be in partnership with local taxi and private hire companies.”
This would accelerate growth into areas where Uber does not operate. Heywood said: “We currently only operate in 40 cities in the UK so there are a lot of cities where you go and find that our service is not available. People travel to those areas and don’t get a service when they open the app. It’s good if we can connect those riders with local taxi and private hire operators in those cities.”
For some cities where Uber already has a presence, that might mean some Uber jobs going, effectively, to Uber’s rivals. Heywood is comfortable with this. “Our intention is to offer riders the best choices possible. I don’t see incosnsistency in, say, Manchester where we offer a range of services.”
Could Uber even scale back in cities where it operates and use local firms instead? In towns such as Manchester and Newcastle, Uber a presence but has not achieved anything like the market domination it has managed in London. “I wouldn’t rule it out,” Heywood said. “We are in the very, very early stages of a long-term relationship build. I think we need to earn the trust of the industry and show that our growth can support the growth in the local industry. It’s not impossible that we could start to change the model in some of the cities in which we currently operate, but it’s early days. We need to make sure Autocab’s current customers feel excited about the investments we’re putting in to Autocab.”
And here is where the charm offensive is clearly needed. Initial reactions to the deal were not positive, with a number of Autocab users threatening either to decamp to rival systems such as iCabbi or Cordic, or in extreme cases, to sue Autocab for breach of contract. Like it or not, but Uber is still seen as the enemy by many in the industry.
Heywood accepts this situation is something he needs to address. “This partnership with Autocab and the investment we’re making isn’t going to work unless it works for our customers. So our customers have to be happy with the deal and understand what it means for them. There is some degree of scepticism about us and that is something we’re trying to right. Absolutely there is more work we need to do.”
One fear expressed by Autocab users is that Uber will use them to build up business in their town, before turning off the tap and setting up an Uber operation, taking all the work for itself. Heywood is quick to rule this out. “We want to be in this for the long term, so we want to build a set of long-term partnerships with local taxi and private hire operators. Not just for 12-18 months, but over the next 10-15-20 years. That will only work if we bring incremental work into the industry and take an equitable share of the value that creates, so absolutely not. We have no intention of playing a short-term game.
His approach is firstly to sell the sizzle – explain why Uber is excited about the deal and what it and what it does for Uber, and then to allay some of the concerns. This includes Autocab’s independence, and crucially, the security of customer data. He said: “Autocab will continue to be independent with an independent board, and Uber will not be able to access the data. Autocab’s data remains Autocab’s data – no Uber employee will gain access to Autocab data with regard to using it to compete.”
Uber’s Strategy is to expand its transport offering beyond the basic ride-hailing service, adding as many modes to give customers as much choice as possible. This includes rental bikes, access to public transport via the app and in London, a commuter Uber Boat service down the Thames. And outside the UK, Uber has been forging partnerships with the taxi sector, he said.
“In the past four years, in over 22 countries we have relations with the taxi industry and are giving them work. The taxi product, where we’re connecting riders to local operators, is fastest-growing product on the Uber app. Working with Autocab is a chance to accelerate that,” Heywood said. “We think Autocab has some really interesting software and we’re committed to investing in that to make them better and compete with ride hailing companies like Uber – that’s what Autocab does and we’ve completely bought into that. We don’t want to subvert or override that.
The opportunity for growth is great – Uber has identified around 170 towns and cities where it currently has no presence, and by taking on partners in those places, it would move closer to providing true national coverage. “We would love to aspire to that,” Heywood said.
In the short term, his problem is stopping disaffected operators from defecting to rivals – and the rivals are certainly aggressively in the hunt – especially iCabbi. Heywood recognises that it is about earning operators’ trust. “My commitment is to be completely open with communications – to listen to customers’ concerns and address them.”
Of course, there are external pressures on Uber right now, which could have a considerable bearing on the company’s future direction. Two separate court cases could make Uber’s business model unsustainable. Uber’s appeal against the loss of its London operator’s licence will be heard in September, while a judgement is due any day on another appeal, against the classification of its drivers as “workers”.
The consequences will be great if these decisions go against Uber. Its argument that London depends upon Uber for mobility will not wash: Londoners have alternatives, even in the ride-hailing service area, in the form of Bolt and Free Now, with Ola likely to follow. The drivers will not be out of work should Uber disappear, and the consumer will still be able to access them. Does Autocab offer an alternative route to the London market should Uber’s licence appeal fail? Heywood is unwilling to be drawn.
“The focus on Autocab is initially on expanding into new cities, so it doesn’t extend to London,” he said. “Our focus is to get our licence back, so I’m not going to speculate on what happens. Let’s talk about it again when we get our licence back!”
The “worker status” case is likely to be damaging in the short-term. It’s unlikely that the court of appeal will overturn an earlier ruling, which will leave Uber and other gig economy companies liable for sick pay, holiday pay and National Insurance contributions, back-dated for seven years. The bill potentially runs into billions of pounds. Going forward, putting Uber jobs into third party operators via Autocab makes sense here, as it takes the responsibility for drivers away from Uber. Heywood added: “We see the court cases as completely independent. We’re working as hard as we can to make sure that we get the right result.”
Heywood has growth ambitions for Uber in other areas, where the ability to call on established private hire operators is likely to be a major benefit: one is business-to-business services; the other is deliveries of food and other goods.
With regard to B2B services, Heywood admits Uber is weak in that department. “Uber is a good service but it’s a bit ‘vanilla’ compared to the private hire industry.” Business clients require “more customised cases that Uber is not very good at delivering, but Autocab is”. This could include new opportunities, such as transporting workers to and from work in a safer and more hygienic environment than bus or train. “If we sell a service that is only through an Autocab customer, that’s something we can enable tomorrow that we can’t offer today. There is going to be a long path ahead of us – identifying places where we can add value,” Heywood says.
The delivery market is another growth area. The home delivery market does have an emerging group of national players. Amazon for goods, and in the food sector, Uber Eats is in the game alongside Just Eat and Deliveroo. Could delivery be a bigger opportunity than private hire? Heywood is not sure. “We’ve seen Covid-19 reverse growth trends. Private hire trips are down 80%, and are currently in a trough, while deliveries have spiked. We need to let Covid-19 settle down and see what’s bigger.” Even so, delivering food is something that dovetails into the private hire sector, and could provide additional jobs in quiet periods.
Ultimately, Heywood believes Uber’s main competition is not other operators – it is private car journeys. He notes that the private hire sector undertakes about 2 million journeys per day, while private cars make 70 million. “The real competition we should be looking at is private cars. They pollute more and sit in driveways 90% of the time. It’s insane that in big cities 15% of space is given over to parking spaces. The second most expensive asset people buy sits idle on the driveway most of the time.”
He asks: “How do we turn that into business for Uber? There is a trend of moving to some form of service. Could we go from 2m to 4m trips per day? How are we going to do that as an industry?”
Heywood is adamant that Uber is changing, and while many in the industry will take some convincing that Uber suddenly wants to be your friend, not your rival, that’s the message. “It’s going to come down to trust,” he says. “We are committed to being long-term partners. There’s only so much we can say now – it’s going to be the things that we do. So judge us by our actions, and if we take actions that grow the industry we hope that is rewarded and reciprocated by trust from the industry. My commitment is to listen, to learn and ern that trust, and grow the industry.”
“There is a sea change. The marker was Dara [Khosrowshahi] coming in – a very different type of CEO to Travis Kalanick. I came in and thought very long and hard about joining having read the press from two-and-a-half years ago. But my commitment is to keep the change happening – and change is very much afoot.”