Uber, Travis Kalanick

It is very hard to know how the people who actually make the wheels in the business world turn, think. Rare is a businessman who would be perfectly at ease in front of the camera, because one, anything they say can be blown out of proportion and two, they don’t want to unwittingly let something slip that could harm their business. Which is why a newly published video clip which shows Uber CEO Travis Kalanick arguing with an UberBlack driver while sitting in the backseat, has everyone intrigued.

The clip is from early in February and shows Kalanick while he is using the UberBlack service to go somewhere. For a large part of the journey, Kalanick indulges in easy chitchat with the two ladies accompanying him in the backseat while grooving to Don’t wanna know from Maroon 5

However, it is after the two ladies get off and Kalanick is left alone with the UberBlack driver, that the real fun begins. Fawzi Kamel who was at the wheel of the car, provided Bloomberg with the clip (appended near the end of the article) in which we see what started as a mellow discussion between him and the Uber CEO, quickly turn sour.

The discussion starts as Kalanick is preparing to get out of the car. The Uber CEO engages the driver in conversation asking him if he saw the e-mail Uber sent to its drivers, in which it talked about the fact that the company was going to reduce the number of Black cars over the next six months. The drivers says that he had seen the e-mail and quickly attacks Kalanick, accusing him of “raising the standards but dropping the pricing.”

When Kalanick counters by saying that Uber was not dropping the prices on UberBlack, the driver parries says that the price drops were happening across other Uber services, Kalanick agrees and tries to explain how they were necessary because the company had competitors.

From there on the argument deteriorates rapidly with Kamal accusing Uber’s policy of change to have cost him $97,000 and caused him to go bankrupt. From there, it takes the Uber CEO merely a couple more dialogues before he loses patience and exit the car while saying:

You know what? Some people don’t like to take responsibility for their own shit. They blame everything on their life on somebody else. Good luck.

Equally pissed, the driver responds with:

Good luck, but I know you don’t gonna go far.

And the conversation ends. Phew. Bet Kalanick wasn’t very happy with the exchange. You can watch the full exchange right below, just fast forward to 04:00 minutes on the video to get to the conversation.

Meanwhile, what Kalanick was trying to explain here — which is also a point that has been raised by Uber investors several times of late — is that Uber is a business and like every other business out there, it has its fair share of competitors. Many of these competitors (Lyft, Didi Kuaidi) are backed by other companies with very deep pockets.

So, what should have been about the product has suddenly become about the prices and the discounts these companies can offer. In offering these discounts and these subsidies, the company burns through its money and indeed, quite a portion of investments made by external parties could get used up this way. The drivers feel it to as the company distributes the weight by reducing the per kilometer price, subsidizing some of the price cut from their own pocket while the rest goes out of the drivers.

What if they were not to indulge in there practices? Say you are a person looking to hail a ride from A to B. Say Uber doesn’t want to hurt its drivers and so, offers to get you there for the usual price. Some other company, say Lyft, offers to get you there for $10 less. Which one will you chose? That keeps happening long enough and the company will lose all its customer base. And that is exactly why, companies must keep an eye on their competitors and modify their own strategy to suit the need of the hour — even if as we saw in Uber’s case, it involves pissing the drivers off.

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