Five myths about Uber

This month, the ride-hailing app Uber announced that it had raised an additional $1.2 billion from investors, who valued the company at about $40 billion. That staggering number, and the aggressive corporate culture that drove the start-up there, have made Uber – with its loyal customers and loud critics – one of the most controversial and valuable tech companies today.

Let’s clear up some misconceptions about the company, its drivers and its customers.

1. Uber is a transportation company.

Uber launched five years ago with the tagline “Everyone’s private driver.” The smartphone app allows consumers to request a ride on demand. A driver picks you up, GPS calculates the distance and the fare, and the app automatically charges your credit card. The result is faster than public transit, more seamless than a taxi and, Uber argues, cheaper than owning a car.

But Uber now sees itself as much more than a middleman for car rides, and its investors clearly do, too. (Jeff Bezos, owner of The Washington Post, is an investor in Uber.) The same sophisticated system Uber has built to match and move passengers could move goods, too. The company is already experimenting with the idea; this year it launched a courier service in New York and a delivery test in Washington, offering corner-store conveniences such as toothpaste and tampons. If the company were to do more on-demand ferrying not just of people but of all the things people need – groceries, diapers, furniture, dog food – Uber would become less a transportation company than a logistics behemoth. That long-term picture would put it in competition with rivals well beyond the taxi industry, such as UPS and Amazon. And it would make the company’s early fights with Yellow Cab look quaint.

Uber hinted at its larger aspirations last year when it updated its tagline. The new phrase: “Where lifestyle meets logistics.”

2. Uber is for rich millennials.

This was more accurate when the company first launched as a black-town-car service offering an upscale alternative to taxicabs. Since then, however, Uber has rolled out a series of services meant for a larger audience. Its low-cost line, UberX, offers rides in the back seat of a stranger’s personal car that are often cheaper than trips in traditional cabs. And the company has started to pilot another service, UberPool, that will make rides cheaper still by piling multiple strangers into one car in a form of carpooling.

As for demographics, Uber argues that it provides more reliable service to minority consumers and underserved neighborhoods that have historically been discriminated against by cab companies. User testimonials bear this out: Uber travels to many neighborhoods where cabs just won’t go. It remains true, though, that you need a credit card and a smartphone.

3. Uber opposes regulation.

In the beginning, it did. Uber warned that onerous regulation would smother innovation. And it argued that the free market could solve the problems regulators sought to manage: Consumer ratings would root out dangerous drivers; surge pricing would regulate driver supply; and Uber itself would vet drivers.

But gaps quickly emerged in this argument, most notably in the insurance coverage for non-professional UberX drivers using their personal cars and in the quality of Uber’s background checks. In many markets, UberX, which enables anyone with a vehicle to become a driver for hire, simply wasn’t legal. For these and other reasons, some cities – including Portland, Ore.; Philadelphia; Brussels; and New Delhi – have sued Uber or tried to ban it.

In this legal limbo, Uber now recognizes that regulation is the price it must pay. The company is savvy, though, about what kind of regulation it wants – and it’s pretty good at getting it. Washington recently passed a law allowing people to offer rides for pay in their personal cars. The new rules require companies like Uber to carry $1 million in insurance, and they mandate background checks and vehicle inspections. Uber is now touting the District of Columbia’s regulation as a model for the rest of the country.

4. Uber is sexist.

This is a fair criticism of Uber’s top executives. The company’s brash chief executive, Travis Kalanick, infamously joked to GQ magazine that he calls the company “Boob-er” for all the attention it’s helped him garner from women. And Emil Michael, a senior vice president, recently caused Uber’s worst PR crisis to date by suggesting that the company conduct opposition research against critical journalists. He singled out PandoDaily editor Sarah Lacy, who has called out the company for sexism.

Uber’s “bro” culture clearly hasn’t kept pace with the firm’s rise as a major global company. And many women miffed by its corporate antics – Lacy included – have deleted the app because of them. Uber’s corporate culture, though, doesn’t necessarily extend to its drivers, precisely because Uber’s business model keeps them at arm’s length. The drivers are all independent contractors. They’re former cabdrivers and part-time actors and unemployed millennials – bound not necessarily by a belief in Uber as a company but by the desire to make extra cash with their cars. If anything, Uber drivers are frequently at odds with Kalanick, too, over the company’s shifting commission rates.

While Uber’s top brass may be sexist, the service thousands of independent drivers provide isn’t.

5. The data Uber has about you is pretty mundane.

Every time you take an Uber ride, the company collects data about you: where you want to be picked up, where you’re going, what time of day you travel and how much you’re willing to pay for that ride. All of this data makes up Uber’s most valuable asset. It allows the company to match riders to drivers on a moment’s notice and to calibrate prices during peak hours.

While these individual data points seem relatively innocuous – particularly when your smartphone is tracking your whereabouts anyway – privacy advocates warn that the information may be pretty revealing. Take a lot of trips, and your Uber log probably knows where you live, how often you go to the red-light district, even whether you regularly ride to AA meetings or medical clinics. Uber proved this point with a blog post two years ago that used trip data to identify “rides of glory” – what appeared to be trips home from one-night stands. (The company has since removed the post.) Uber executives’ recent antics raise questions about whether the company will behave responsibly with this data – or, as Michael seemed to suggest, whether it will use personal data against its critics. Privacy advocates also worry about whether all this information could be accessed by hackers. As the company expands, Uber will need to persuade consumers to trust not just the service it provides but also its stewardship of the data it collects in the process.

Badger is a reporter for The Washington Post’s Wonkblog.