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Why Uber is Not Part of the Sharing Economy

Raz Godelnik headshotWords by Raz Godelnik
Investment & Markets
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Last week Uber raised $1.2 billion in its latest round of funding, bringing the company's value to about $40 billion. The headline on TheStreet was: “Uber's $40 Billion Valuation Nears Facebook Territory as Sharing Economy Continues to Soar.”

I find this headline quite accurate except for one thing – Uber is not part of the sharing economy.

I know that it might sound a bit strange, as Uber is one of the more common examples of the sharing economy. But bear with me for a minute while I try to make the case as to why Uber, despite being a business success story, still shouldn’t be considered as part of the sharing economy.

Looking at definitions of the sharing economy, one might actually think there’s no problem with addressing Uber as part of it. For example, in a 2013 report prepared for the European Commission, The Sharing Economy Accessibility Based Business Models for Peer-to-Peer Markets, the authors define the sharing economy as a space including “companies that deploy accessibility-based business models for peer-to-peer markets and its user communities.” Another definition comes from Adam Werbach, co-founder of Yerdle: “With sharing economy there are activities that take underutilized resources bringing them to use through the application of technology and community.”

Both of these definitions could fit Uber, especially with regards to its UberX service, in which ‘regular’ drivers use their own cars to provide customers with rides.

However, I believe that there’s more to the sharing economy than just creating peer-to-peer marketplaces and making a better use of underutilized resources. Take for example the framework Rachel Botsman, the co-author of “What Mine is Yours,” offers. She describes the core values of the sharing economy (or the collaborative economy as she refers to this space) as empowerment, collaboration, openness and humanness. “In terms of the underlying philosophy, it’s about putting these values above the end goal of profit maximization,” she writes.

Now, this might sounds like a narrative taken from a hippie lexicon, but to me it puts the finger right on the spot. The economic viability of the sharing economy is important, but so are the human values it promotes. After all, the hope (at least mine) is that the sharing economy will provide us with the much-needed vision of how a more sustainable future or a more humanized way of living would look.

To me, enhancing humanness through the sharing economy is not limited to the interactions between the service provider and the user, where we learn to trust strangers or redefine our sense of community. It is also about the values the organizations involved in the sharing economy stand for – we can’t hope to create the change we want to see in the economic system and humanize it if the new players have the same values the the old ones have. Would it really make a difference, for example, if Lending Club will replace Bank of America as America’s top lender -- but will have the same values?

And this is where Uber fails.

While the company puts a lot of effort in the interactions between customers and drivers, creating seamless and frictionless user experiences, it seems to be failing time and again when it comes to ethics, governance and embedding human-based values into its core business. Recent examples include using aggressive, questionable tactics to undermine Lyft and other competitors, allegations of privacy violations of customer data, and the revelations that Senior Vice President Emil Michael suggested the company should consider investigating the private lives of journalists critical of Uber.

After looking at these examples I thought no story about Uber could surprise me, but one I read last week actually did: Profs. Zeynep Tufekci and Brayden King wrote in a New York Times Op-Ed about “a 2012 post on the company’s blog that boasted of how Uber had tracked the rides of users who went somewhere other than home on Friday or Saturday nights, and left from the same address the next morning. It identified these “rides of glory” as potential one-night stands. (The blog post was later removed.)”

While these stories didn’t seem to undermine investors’ trust in the future of Uber, the media seemed to explode with explanations on what’s wrong with the company. PayPal co-founder Peter Thiel, who is also an investor in Lyft, called Uber "the most ethically challenged company in Silicon Valley." Prof. Arun Sundararajan compared Uber to Airbnb, explaining why the latter lacks the right “platform culture.” Robert Cyran suggested on DealBook that “Uber is one startup that needs to grow up fast.”

My two cents are that what we see is the result of a missing ingredient, humanness, which is required in every sharing economy recipe. Again, this is much more than just creating great interactions between service providers and users. It is best described by Nobel peace laureate Desmond Tutu, explaining the meaning of ubuntu -- the essence of being human:

“Ubuntu is very difficult to render into a Western language. It speaks to the very essence of being human. When you want to give high praise to someone we say, “Yu, u nobuntu”; he or she has ubuntu. This means that they are generous, hospitable, friendly, caring and compassionate. They share what they have. It also means that my humanity is caught up, is inextricably bound up, in theirs. We belong in a bundle of Life. We say, “a person is a person through other people”. […] I am human because I belong, I participate, I share.”

So, while Uber’s recipe seems to include many right ingredients I believe it still needs to find the way to add a lot of humanness into it. Only when we could say on Uber “Yu, u nobuntu,” it will be rightfully considered part of the sharing economy. Until then it’s just a successful car service business.

Image credit: Adam Fagen, Flickr Creative Commons

Raz Godelnik is an Assistant Professor of Strategic Design and Management in the School of Design Strategies at Parsons The New School for Design. 

Raz Godelnik headshotRaz Godelnik

Raz Godelnik is an Assistant Professor and the Co-Director of the MS in Strategic Design & Management program at Parsons School of Design in New York. Currently, his research projects focus on the impact of the sharing economy on traditional business, the sharing economy and cities’ resilience, the future of design thinking, and the integration of sustainability into Millennials’ lifestyles. Raz is the co-founder of two green startups – Hemper Jeans and Eco-Libris and holds an MBA from Tel Aviv University.

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