Uber and Lyft CEOs Step in As Drivers

After years of running Uber, CEO Dara Khosrowshahi decided to become a driver in an effort to gain firsthand experience and better comprehend the difficulties his employees faced. He spent months traveling around San Francisco in a pre-owned Tesla Model Y.

On April 17, Lyft co-founders Logan Green and John Zimmer will step down, giving the top job to Amazon executive David Risher. This transition comes at a critical juncture for the ride-hailing pioneer as it struggles to maintain market share and faces questions about its viability.

How Uber CEO Dara Khosrowshahi Becomes a Driver

Dara Khosrowshahi has made it his priority as CEO to ensure his company's drivers feel appreciated and valued. He is one of many tech leaders who has taken a step into the driver's seat, serving as an inspiration for aspiring managers to break down barriers between their leadership teams and frontline employees who make their companies run efficiently.

Khosrowshahi recently embarked on "Project Boomerang," a venture to gain insight into the driver experience. This experiment was meant to help Uber improve its relationships with drivers after post-lockdown labor shortages caused them to leave in droves.

After one month in the driver's seat, Khosrowshahi sent his staff a list of things he liked about their app and those that needed improvement. Additionally, he requested suggestions on how it could be made better.

He suggested the company provide clearer instructions to couriers delivering food to multibuilding apartment complexes. Furthermore, he stated, the company should make it simpler for new couriers to sign up and find assignments.

These suggestions could assist the company in attracting and retaining more drivers, leading to an increase in deliveries over the last few months.

Even with these improvements, Uber has faced difficulties over the past year. In 2017, a series of scandals forced then-CEO Travis Kalanick to resign and his actions cast a shadow over the company ever since.

Thankfully, the company's stock has recovered this year and Khosrowshahi is working to address the many issues that have been weighing on it for some time.

What he Learned

Uber CEO Dara Khosrowshahi first experienced being a driver, and quickly understood the struggles experienced by these professionals. By listening carefully and responding appropriately, his company could attract more employees and extend its lead over Lyft.

Khosrowshahi became acutely aware of how hard it can be for drivers to make a living, and that the company must constantly combat misperceptions about pay rates. So when drivers in May called for greater transparency around how their rates are determined, Khosrowshahi and others took action.

Uber overhauled its app and began recruiting a new generation of workers, but drivers remain concerned about their pay. Even after a California court upheld their independent contractor status, some still feel treated unfairly by Uber.

Khosrowshahi and other executives responded to these complaints by improving driver compensation, hiring consultants and rewriting a contract. Furthermore, they implemented a "revenue share model," which allowed them to share some of the profits from rides with drivers.

Changes, combined with a relaunch of the app and promotional activities, helped re-engage drivers in the first half of 2020. However, since then the company has experienced a slow return to travel on West Coast cities.

Therefore, ride-sharing company's operating cash flow has been negative for most of the past year and its stock has lost 40% of its value.

The ride-sharing giant faces challenges in a world where the sharing economy has created numerous regulatory issues. Furthermore, it must contend with competition from Lyft, who installed its CEO this month and is actively competing for market share.

What he Changed

Uber and Lyft have both experienced significant losses in recent years and have struggled to regain market share. Both companies have lost approximately 90% of their value since going public in 2019.

After a turbulent 2017, Uber hired then-Expedia Inc top boss Dara Khosrowshahi to repair its image, restore relations with investors and boost finances. The new CEO made significant changes within the company's leadership team as she assumed some of its most prominent positions.

This week, Lyft's board announced that founder Logan Green and President John Zimmer would be departing in the coming weeks. They will be succeeded by Lyft director David Risher.

Lyft has been struggling to recover from its financial difficulties and take market share away from rival Uber, whose ride bookings have seen a recent uptick. That contrasts with Lyft's declining profitability and nearly 700 employees it laid off last November.

Uber has taken a different approach to competing with Lyft, creating an ecosystem that attracts and retains drivers who can do more than just ride-hailing. Its food delivery service, UberEats, is now the second largest meal delivery service in America; other offerings include grocery deliveries and bike-share services.

Lyft's new management hopes to reduce losses and regain some market share from its main rival. Instead of launching new products like delivery or even selling the company, Lyft is focusing on redesigning its platform to enhance both customers' and drivers' experiences.

How it Helped Uber

CEOs would do well to get a hands-on understanding of their company they lead, so that they can better comprehend the day-to-day struggles of their teams and make informed decisions.

In September, Uber CEO Dara Khosrowshahi took on the role of a driver in an experiment dubbed "Project Boomerang." This endeavor was intended to give Khosrowshahi firsthand knowledge into his company's drivers' experiences during post-lockdown labor shortages.

Khosrowshahi learned the value of empathy during his tenure as a driver. He acknowledged that his company faced an uphill battle and decided to do something about it.

Khosrowshahi made several changes to his company to address drivers' complaints about pay and safety. To enhance driver experiences, he implemented new policies and redesigned the app to help them find work more easily.

Lyft also began providing personal protective equipment to its drivers, such as face masks and disinfectant wipes. Furthermore, Lyft provided tens of thousands of vehicle partitions to frequent drivers for extra safety.

Khosrowshahi made a wise decision by investing in research to gain an understanding of his company's drivers' needs. Drawing upon his personal expertise and extensive experience, he was able to implement changes that strengthened their bond with the business.

Uber was able to increase its profitability by offering drivers higher wages and bonuses. Furthermore, the company took safety measures in response to assault allegations, creating a welcoming environment for riders.

Uber may be a profitable company, but its competitors face similar difficulties. Whether they offer food delivery services or international markets, the cost of operating delivery vehicles is an impediment to success.

Conclusions

CEOs sometimes take on driving roles to gain a better insight into the challenges their companies face. Dara Khosrowshahi, Uber CEO, took this role last September and drove for his company.

It's nothing new, but executive at ride-hailing firms appear increasingly concerned about their workforce's treatment. Companies have been fighting drivers' demands for higher pay, greater transparency in how rates are calculated and improved benefits - to the point that many workers are now living in their cars to make ends meet.

The Wall Street Journal reports that Uber has been pressuring state regulators to address this problem. California officials are considering passing a bill which would raise the threshold for workers' status as employees, potentially having significant repercussions for gig economy firms such as Uber and Lyft.

Meanwhile, the two companies have been locked in a public battle over whether drivers should be classified as independent contractors. A recent court ruling has mostly upheld their claims, leaving many thousands of California drivers' fates in the hands of legislators.

One thing is certain: if Uber and Lyft cannot find a way to provide better wages, benefits, and working conditions for their workers, they will be in trouble. This is especially true of their drivers who are losing out on significant incomes while having to sacrifice time with family and friends in order to make ends meet.

This problem is of immense concern to drivers and those who support them. It also poses serious threats to public health, traffic congestion, and transportation.