How Uber plans to swerve its way out of the coronavirus crisis


On Friday, March 20, at 4:05pm, Uber put out an urgent call for “weekend warriors”. The night before, California had instated a shelter-in-place order for the entire state — where the rideshare company is headquartered — superseding county-specific mandates earlier in the week. Italy and Spain were already under lockdown; and the UK, Greece, India and a slew of other countries would soon follow suit. Restaurants around the world were being made to close indefinitely. Suddenly, Uber’s survival depended almost entirely on takeout and delivery. And that translated, in part, to thousands of restaurants scrambling to showcase themselves on Uber Eats.

The end-of-week email went out to community operations teams, asking for over the weekend help with an unprecedented influx of restaurant onboarding requests. Teams forwarded along the message until, less than 24 hours after the director of regional operations clicked “send,” more than 900 employees had volunteered to help. They knew that the longer it took to onboard new restaurants, the longer restaurants would go without turning a profit.

“It was the kind of onboarding we’d never seen before,” says Daniel Danker, senior director of product at Uber Eats. “That weekend, we scrambled. We got employees across Uber, around the world, across time zones, to help onboard restaurants. That means helping bring their menu onto the platform, helping them figure out how they’re going to get paid, how they’re going to receive orders.”

The sprint to get through the restaurant backlog continued into the following week, as the company introduced features like same-day payout and tips for restaurants. Efforts have evolved into a Covid-19 Slack channel, with hundreds of members constantly sharing ideas for action, and a task force of executives — who, Danker says, are just as worried about the future of the world as everyone else.

Executives won’t admit it outright, but that worry likely extends to the future of their company. Uber’s daily active users fell almost 40 per cent year-over-year in March, according to site analytics firm SimilarWeb, and for the first quarter of 2020 the company recorded its lowest quarterly count of daily active users since mid-2017. To further complicate things, the Uber’s competition is biting at its heels. Lyft’s downloads suffered less than Uber’s this quarter, says Clement Thibault, industry consultant at SimilarWeb. In the first quarter of 2019, Uber had 42 per cent more downloads than Lyft, but this quarter, it’s leading by less than half that — the smallest margin in at least two years.

On Uber’s first quarter earnings call last week, chief executive Dara Khosrowshahi said the Rides business was down globally about 80 per cent in April. The company reported $3.54 billion in revenue alongside a net loss of $2.9bn — Uber’s most significant loss in three quarters. But there was some cause for optimism: Khosrowshahi reported that for each of the past three weeks, Rides had recorded week-on-week growth, and Eats’ gross bookings had grown by 54 per cent. In light of this, Uber chose to redirect resources, turning away from Rides to bet on Eats. It partnered with supermarket chains around the world to break into grocery delivery and expanded its services to moving packages. The company has also reportedly been in talks since February to acquire GrubHub, the food delivery company operating across the US and in London.

On the call, Uber also announced its strategy for barricading falling profits against the avalanche that is coronavirus. Last week, the company slashed its full-time workforce by more than 3,700 people, primarily in customer support and recruiting; folded JUMP, Uber’s e-bike and e-scooter arm, into Lime; and exited eight unprofitable Eats markets, including the Czech Republic, Egypt and Saudi Arabia.

Khaled Helioui, an early investor in Uber, says that he’s impressed by the way leadership has handled the crisis. “Uber has taken a good grasp of the complexity and severity of this crisis, and early on,” he says, referencing the company’s ability to chart what’s happening in other markets. “They acted quickly and swiftly and decisively.”

Former executives and employees are among those who believe in a net positive outcome for Uber. A few weeks ago, James Cox — a former Uber executive who oversaw the global rollout of UberPool — worked with other ex-employees to write a list of pros and cons surrounding their Uber investments. His final prediction: “Short-term pain for long-term gain.”

But current employees are painfully aware the cost-cutting measures aren’t over. “Rides is feeling the most anxiety — both because we’re performing so abysmally right now but also because there’s no certainty about when that’s ever going to come back,” says one Uber employee, who asked to remain anonymous. “The idea that everything will be fine and will go back to the way it was is unadulterated bullshit. Anyone who’s paying attention to our earnings or to the news knows that that’s bullshit.”

In an all-hands meeting about two weeks ago, just before the mass layoffs, Uber’s executive leadership team made it clear they were going to have to make cuts. Days later, at another all-hands meeting — there have been more of these than usual lately, according to the Uber employee — Khosrowshahi and Nikki Krishnamurthy, Uber’s head of human resources, made it clear there would be more layoffs coming.

“I just got out of a meeting where we closed with what kind of felt like, ‘I might not see you all again at our next weekly,’” says the Uber employee.

Some employees predict that those who work on Eats are best positioned to keep their jobs. The Uber employee says that even though no one’s sure who’s making the decision, a number of his colleagues are trying to prove their team’s value and make the case for their individual positions. “It spurred me to take action to save my skin, whether it’s by staying on here or by going somewhere else,” says the Uber employee. “I’ve been doing everything that I can to make sure that my livelihood isn’t impacted in a way that it doesn’t need to be. And that takes time away from my day-to-day.”

In a recent all-hands meeting, one person asked if Uber could handle the layoffs as well as Airbnb did. (The company’s offering included 14 weeks of base pay, one year of health insurance through COBRA, a public-facing talent directory website to help departing employees find new jobs and redirecting portions of Airbnb’s recruiting team to help with job placement.) The Uber employee recalls Khosrowshahi and Krishnamurthy saying they admired Airbnb’s approach but that Uber will have to do things its own way. Another person asked whether Uber could create a layoffs talent directory like Airbnb’s. The Uber employee recalls that Krishnamurthy said it seemed like a good idea but, unfortunately, they’d just laid off a significant portion of the recruiters that could set it up.

Despite the harsh reality of the situation, the Uber employee believes management is thinking strategically rather than responding to the crisis in a knee-jerk manner. He expressed disappointment with Uber’s plan to take over GrubHub while simultaneously planning layoffs, but he recognises that it likely makes sense for the business. “It’s for the best for the company but obviously not for the individuals,” he says. “It’s been really hard getting work done because of the uncertainty and the anxiety that’s hanging over all of us.”

Feelings of anxiety aren’t limited to Uber’s tech workers. Drivers fear contracting coronavirus, but they’re also worried about making rent. Some feel the company hasn’t followed through on its promises. On Monday, dozens of drivers took part in a caravan protest against gig worker labor practices — organised by advocacy groups We Drive Progress and Gig Workers Rising — that ended at Uber’s San Francisco headquarters.

One coronavirus impact survey conducted across two weeks in April by researchers at University of California Santa Cruz, found that 56 per cent of on-demand ride-hailing and delivery drivers in San Francisco had lost 75 per cent or more of their income. Nearly three in ten said they were still accepting jobs despite fears of the virus because they needed the money.

Rosa Mendoza, Hector Castellano and Mekela Edwards are three Uber drivers currently worried about paying their bills. Mendoza is still driving for Uber and Uber Eats, while Castellano isn’t driving at the moment under doctor’s orders, and Edwards has been self-quarantined since March 18 due to a health condition.

“I had been driving up until that point,” says Edwards. “I didn’t feel like, if I stopped driving, that I was going to be able to pay my bills.”

In the UC Santa Cruz survey, results painted a bleak picture as far as support from the apps: Only 19 per cent of respondents said they were offered guidelines on what to do if they exhibit symptoms of coronavirus, and just 30 per cent were offered training on how to protect themselves through contact with customers.

Due in part to her own health condition, Edwards started being vigilant about the risks of coronavirus back in January — wiping down seatbelts, door handles, the boot and anywhere else passengers had touched. Between January and March, she says Uber didn’t alert drivers of any risk. A few months ago, Edwards recalls picking up a passenger at the airport who said she’d just flown in from China. Edwards called Uber to ask if, in light of the pandemic, drivers should take additional precautions with passengers who’d recently traveled to the region. “The people on the line… it didn’t even cross their mind,” she says.

Two weeks ago, Mendoza picked up a passenger without a mask who had a coughing fit and then threw up. Mendoza wore a mask she bought herself, and she used her own towels and disinfectant to clean up. “That night, I couldn’t sleep,” explains Mendoza. “I’m cleaning the car all the time because I’m scared something [will] happen. I’m not the only one.”

Edwards says the company hasn’t followed through on in-app messages offering cleaning supplies and PPE. Her son is also an Uber driver. “There was a rumour that they were going to mail out masks and mail out hand sanitiser — that never happened,” says Edwards. “I was making hand wipes for him, and I believe that his dad bought him one or two masks, but he still doesn’t have any masks except for what we provided to him. And he’s still driving.”

When asked about the lack of provided masks and disinfectant, an Uber spokesperson says that like many companies it had “struggled to find these types of supplies”, adding that “millions of ear-loop face masks” were now being packed and shipped, with more on the way. “Given the logistical realities, getting a mask to every active driver will take time, and we have been honest about that,” the spokesperson says.

Khosrowshahi says the company will set entirely new expectations for customers’ “second first ride”, marking a return to Uber as cities reopen. “Our commitment to safety is not new — it’s been a huge focus since I became CEO,” he explains. “Of course, these days a different kind of safety is top of mind: It’s about hygiene, health and face coverings. It’s about protecting not only yourself but everyone around you.”

On a call with reporters on Wednesday, Uber’s senior director of product management, Sachin Kansal, confirmed that the company had acquired 20 million masks and provided five million to drivers so far, and that the engineering team was working on an efficient distribution strategy. He also announced that drivers would be provided with cleaning supplies and PPE via mail or contactless pickup in a nearby location. On May 18, a new mandatory face covering policy will take effect for anyone riding or driving with Uber. In June, Uber will begin a partnership with Unilever in the UK to provide health and hygiene kits to drivers.

What happens after June is still speculation. There’s been a fundamental shift in the way we move, especially in Uber’s primary market: cities. “People are heads-down, while working from home, while trying to look after the kids and deal with childcare at the same time as being on a leadership call,” says Danker. “So all of those things are challenging, but I think the sense of resolve and the sense of mission… can get you through all kinds of challenges, and I think everybody’s feeling that right now.”

Beyond Eats, regaining the company’s business is “going to be a long haul — no one is kidding themselves about that anymore,” says the Uber employee. He remembers that soon after the onset of coronavirus, the company seemed to think things would be fine, using the Rides business in Hong Kong’s relatively quick bounce back as an example. Some employees believe the future will look kindly on micromobility — transportation like e-bikes and e-scooters — and are disappointed in JUMP being offloaded to Lime. “The upshot is that Uber is in a position to do the right thing by helping cities reinvent the way that people get around, and I hope that it happens in a morally responsible and sustainable way,” says the Uber employee.

If tech workers like him are the middlemen in this pandemic, connecting consumers with in-demand services, then Uber’s drivers are on the frontlines, witnessing the company’s strategy play out in real time. “With pressure, Uber responds,” says Edwards. “But it’s always under pressure.”

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