The Untold Story of One of Uber's Very First Drivers

to drivers. It provides much needed income for college students, the recently retired, and the unemployed. But half the driving gets done by people working more than thirty five hours a week. These people often fight to make ends meet. The hours are long and the returns can be meager. Today we're exploring the sensitive relationship between Uber and its drivers. Our story starts back in the fall of two thousand ten, when Uber was just starting out in the Golden City

by the Bay, San Francisco. One of the first Uber drivers was a soft spoken immigrant in his mid thirties named Sophia and Uali, an Algerian former safety specialist in the oil industry. Like many immigrants to the US, Sophia found work in the taxi and limousine industry. A fleet owner gave him a smartphone with the Uber app and a pearl white two thousand three Lincoln town Car. It gets people to like the car because it's white and the whole system was black. At that time, all Uber's

cars were black. This car stood out. In fact, as Sophia tells us, Uber initially wanted him to change the car. Even Ubert got in touch with me to UH to try to to convince me to to change the car. And I was like, if if the car changes, I am not here too. So because you had no other option, exactly, I had no no other option, and I started to

to build some right there's esteem to that car. And how I did that it was it was like tedding my riders that this is the only single white car in the whole branded the car exactly, branded the car exactly. Pretty soon Uber's customers were tweeting about the car and reviewing it on Yelp, hoping that they would call an Uber and get Sophian's majestic white ride. There was something magical about Sofian's car, and someone who it was exactly it's lost to history decided to call it the Unicorn. Hi,

I'm Brad Stone and I'm Eric Newcomer. Welcome to this week's episode of Decrypted. Now, Brad, come clean. The timing of this podcast isn't totally coincidental, Okay right. My new book, The Upstarts comes out this week on January one. It's about the rise and rapid expansion of the global sharing economy, juggernauts, Uber and Airbnb, and the nearly NonStop controversy and turmoil

that they have left in their week. Today's story of Sophion in the Unicorn is drawn from Brad's book, and through Sophia's experience, will dig into the skills at all entrepreneurs, including Uber drivers, need to make it in a rapidly changing business world. Will also looks specifically at what Uber offers its drivers and ask whether one of Silicon Valley's most celebrated successes is living up to its mission of helping drivers generate self sustaining income. Sophion is one of

the world's most prolific Uber drivers. He's been there since the beginning and says he's driven around thirty thousand rides. Now, that's five thousand rides a year. More than four fifteen rides a month, more than eighty three rides a week, working six days a week. Not to be glib, but that's a lot of sitting down. It is so it's San Francisco in the fall of two thousand ten. Even in Uber's early months, sophia On implicitly understood its potential.

Customers loved it. Drivers didn't waste as much time sitting around waiting for fairs, and the app was easy to use, so newcomers to the city could seamlessly find their way around. In the beginning, sophia says it just paid the bills, but after a while the money started pouring in. Sophion was like a lot of early Uber drivers. He saw the company as a platform on which he could build

a business. Uber encouraged this. Travis Kalinnik, Uber CEO, boasted about drivers who were building fleets of cars on the Uber system. After seven months, Sophion left the fleet and took over the Unicorns lease from the owner. Then he started taking loans out, leasing new town cars and hiring new drivers. His company was called Global Way Limousine because he had aspirations to expand a around the world, and

business was good. He told you he was making seven hundred or eight hundred dollars a day, right, he was doing that by taking commissions from his drivers who were driving his cars for Uber. Meanwhile, Sophie and kept driving the Unicorn, which was getting famous in the city. And at the same that You've got this car and it's kind of a local celebrity, right, the exact unicorn. Did you find that people wanted the Unicorn, that they were

trying to hail it? Oh? Yes, definitely. I mean a lot of people who I get every day, they all the ones who love it. They all say, how how could we How can we get you every day as our driver? But unfortunately the Uber system doesn't allow allow people to have that option. Well, that might have been some of the magic of the Unicorn, that I could only show up like a real unicorn. It can only

it can only show up through a circumstance. Exactly, luck, Exactly, that's what I say when when I find people who doesn't like that. And then the ground shifted under his feet. In the fall of two thousand thirteen, following rivals like Lift and Sidecar, Uber introduced a ride sharing service called uber x that let anybody with the driver's license pick up a passenger with their own vehicle as long as they met certain criteria. And with the rollout of uber X,

Uber started lowering prices and it kept on lowering them. Travis, the CEO of Uber, raised a fortune and venture capital. He was using price as a weapon to grow quickly and outpaced rivals with less money. There was also a bigger mission. He said that Uber would replace car ownership right but Travis is, above all else a competitor. He wanted to make sure Uber, not Lift or anyone else, dominated the market for ride sharing. It took a while for Sophie On to feel the effects of these changes.

Writers slowly migrated from Uber Black to the cheaper alternatives Uber Black rates fell each ride became less profitable. But worst of all, Sofian's drivers eventually gured out that they shouldn't be giving them a commission at all, but driving their own cars directly for Uber. So when uber x rolled down, I I was thinking to find other ways how to how to balance up my my business with

the changes. So so the business kept being good up up to to the first I would say, to the first quarter of of the thousand and fourteen, and then it started we started to uh to fill the effect of uber X, you know, so prices started to drop down, and maybe the demand was the same, but prices started to drop down because of the the Uber x launch. So from there I I felt that it was a turning point for the Uber system. Not necessarily on the

bad way, I would say. I would say, knowing the business from the beginning, I had to take some some action to to not lose money. What about your drivers, did they start to leave and go out on their own because there was this opportunity to use their own cars? Well, definitely you have. You have you have this pressure from your drivers to to go away from you because there is that that opportunity to end and honestly you don't

have any choice. Then of course encouraging the drivers just being nice with them and make as much as business they can with you, and then encourage them to go, you know so, because because it's open for them. By two fourteen, Sophie had to shut down his business Global Wey Limousine. But it's remarkable that he really understands why Uber made these changes and it is a piece with it. There was a huge, huge demand from from customer customer site and the huge demand from Uber to encourage people

to to have fleets at the beginning. But when the business started to change and policies change and prices started to go down a little bit, they had this idea, which is a brilliant idea and I totally understand it. Drivers are more happy being their their own to be to be our own boss, you know. So I think that that what makes Uber change change their their policies to not encourage people to have to have fleets anymore, because the drivers are more happy, happier when they have

their own car and their own business. And to be honest, it's a good decision. It's a good decision from them because the companies health here this way then he used to be. Because some of the partners who had fleets and a lot of drivers, I can't tell you my drivers they were happy, but not all drivers who were driving for someone they were happy. So because they were sharing their income exactly, they were sharing their income and sometimes without any any good business criterias, you know, so

they are sharing it. Ah, there was a lot of injustice in there, you know. So I saw things from from partners who had fleets. That's that's sometimes you hire. They hire drivers and they give them like a very very low, the lowest portion from from the business they had. They they were doing it in percentages, and the percentage they give them it's it's just fair low. So let's say, let's say the part to know who hires ten drivers, they give deals that that are not in the favor

of the driver. It's there is no badance to help to help a driver. So they were given, let's say, for an example, sevent thirty percent deal, So the owner of the card takes seventy and the driver takes which is not not right. So at this point Brad is Sophia and still writing that white unicorn. Well Eric will get to that, but yeah, Sophie and was now working for himself, driving for Uber Black, trying to make it.

In Uber's new economic reality, the days of seven hundred dollars a day earnings were a thing of the past. How much are you making now per day? I would say it's an average of three fifty three three fifty three hundred, three hundred fifty dollars, which is still pretty pretty good. Pretty good. Sounds like half of what you're making in the heyday. Yes, but I would say, let me tell you this. I would say, back in the day,

it wasn't normal. The prices were there was very little competitions, yes, little competition, and it was to be honest, it was overpriced. I mean for someone to take an Uber and Uber Black, which is the only option on the system, take an an Uber black from the financial district to the North Beach for twenty five bucks, that's that's a lot of money. That's a lot of money. It sounds like Sophian is happy being his own boss, working for Uber Black, making

a decent living well. His story is a bit of an aberration. There are many drivers who work for uber x and other Uber services who struggle to make ends meet and don't make much above minimum wage. Up Ahead will zoom in on that struggle so many drivers are facing, and we'll see what Uber is doing to make things better for drivers. But first a word from our sponsor. Inside the most successful organizations, I t has gone from supporting the business to driving the business. But the costs

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Right before the break, we saw Sophion forced to dismantle its dreams of running a global taxi fleet and deal with a fifty pay cut after Uber started rolling out cheaper services like uber x and Uberpool, chipping away at drivers salaries. Eric you and olivia's Aleski recently wrote an amazing story about one extreme Some drivers now go to trying to make ends meet sleeping in their cars in

parking lots. Now, why would anybody possibly do this? You know, we talked to one driver who lives in Sacramento, drives into San Francisco, slept in a safe way. Now McDonald's worked all week. It's a way to maximize his income while keeping costs low. It's free to sleep in your car. I can't imagine that they're smelling too good after a couple of days. Well, some sneak off to a hostel

or find a gym and take a shower. So is there anything Uper is doing to incentivize this or to put another way, could they discourage it if they wanted to? But sort of the ultimate Uber value here, right, flexibility. The drivers are free to do whatever they want. Lift restrict drivers to fourteen hours of working continuously. Uber drivers

set their own schedule. It makes me wonder if drivers are kind of locking themselves into a career and the lifestyle that's getting worse and worse and harder and harder over time. Drivers say their pay has gone down over time and they're not really building up the skills to find another job. It feels to many of them like their career as they've chosen is getting worse and worse.

But we should point out that some of the drivers you guys spoke to were actually proud of the fact that they were sleeping in in parking lots and in camps at night. That they felt like they kind of hacked the Uber system. Yeah, they're taking fars when they're at their most lucrative, you know, late at night, early in the morning, building their schedule around sort of the commuter and the late night millennial going out to a bar. So so you know they're they're going into this pretty

clear eyed. UH. To explore this further, I spoke with one of our favorites, the ride share Guy Love the ride chair Guy. He's one of the most prominent experts when it comes to sort of thinking about the best way to make a living as an Uber driver. My name is Harry Campbell. I'm an Uber and Lift driver and founder of the Ride Share Guy blog, podcast, and YouTube channel. Harry has been driving for Uber and Lifts

since two thousand fourteen. I pretty quickly realized that it's not the most difficult job in the world, but it's definitely a little bit more complex than it seems, And so I started a blog about my experience as a driver, what it was like getting signed up, what it was really like working for the services, and now we try to really highlight the good and the bad about being

an Uber and Left driver. When Harry started driving for Uber, drivers could make thirty to forty dollars an hour on weekend nights, and Uber was advertising drivers could make ninety thousand dollars a year right. Although they recently settled the lawsuit about those kinds of exaggerated claims. Yeah, Uber paid a twenty million dollar penalty to the Federal Trade Commission

for misleading drivers about earnings and vehicle financing claims. So what does Harry the rideshare guy say about driving for Uber now? He says Uber has been changing all along, and not many drivers are as accepting of this as Sophia.

The only constant in this industry is changed. Just knowing that, especially from a driver's perspective, I mean, what the strategies that you're using, or the places you are driving, or even the pay that you're getting six months twelve months ago is not going to be the same today, right, And I think that's the big thing for a lot of drivers. Drivers don't like change. Nobody likes change, whether it's uberpool or whether it's lower rates or whatever it

might be. So you definitely have that side of the equation for drivers, And I mean for drivers that have been doing this for a while, they've sort of seen a very big shift. Is that sort of vision of the k a year salary still a vision that drivers believe in today? How is sort of both the myth and the reality of being an Uber driver changed since

you started tracking the company? Well, I don't think there are any drivers today that are going in or getting into Uber expecting to make anywhere near ninety thousand dollars a year. I think that if anything, Uber has had more publicity sort of against that notion than they have for it. And you know, kind of like what I always say is that it's still a good opportunity for a lot of people. It is still one of the most flexible jobs in the world. You can log on

and log off whenever you want. It's just that it's shifting more towards if you want to make the most amount of money, you need to log on during certain times, you need to drive certain places, and so it might seem like it's flexible, well paying from the outside, but once you actually start doing it and you start driving, you do realize that Uber does control a lot of when and where you drive. Eric I've noticed this also from talking to Uber drivers. Why are they dissatisfied with Uberpool?

As Harry suggests, Pool makes their lives harder, it's more complicated. The hardest part of being Uber drivers picking up passengers and dropping them off, and Pool asked them to do much more of that an hour. There's the perception, at least that they're making less money do you think that's right? The pay on pool is super confusing and it depends sort of who you trust. I think Uber would say. When it works on an hourly basis, drivers are making

more because they're getting more people in their cars. But drivers see that on a per passenger basis, they're making less. Passengers pay less in the hopes that they'll be able to cram multiple people and they may not always have a full car exactly. So last summer, Uber hired a new president, Jeff Jones, and marketing exact at Target and Jeff is called two thousand seventeen the Year of the

Driver at Uber. What does that mean exactly? Well, One, it means they're just going to communicate with drivers better. You know, you can see him tweeting it, drivers trying to answer their problems, posting on LinkedIn. They're going to improve their support so that drivers have someone they can reach out to. But this is an engineering company. More and more in Uber really thinks it can build tools

to help drivers. That means, you know, when they want to head home, helping the route more efficiently get them home with fares along the way, so they're getting paid for every hour. The more rides you can get, the more your per hour pay is going up, or at

least staying the same. Uber has always, of course paid lip service to drivers, but it feels to me that the key constituency has always been writers, and that over the years they've basically focused on lowering fares as almost a competitive weapon to try to corner the market in ride sharing. Yeah, Brad, you know this better than anybody. Uber is built around the founding story of serving the writer. It's about calling a car with a push of a button when you want to go out late at night.

It's not a company that was built sort of to give employment to sort of hundreds of thousands in the United States alone drivers. And so I think after the fact, there's sort of had to realize this is a two sided marketplace. We need to celebrate riders and drivers. So what is Uber telling you right now about this new focus on drivers. I spoke with none new John A. Karam, Uber's head of driver engagement, for the story about drivers who sleep in their cars. I thought it had relevance

to this discussion. He said, the way to make more money on our platform in general, and the way that everyone makes more money is when the system becomes more efficient, so there is less time between trips for drivers they're driving to um, you know, places that are closer by to pick up passengers or or or things like that, expanding the number of different kinds of trips that they

can take, so uber eats and things like that. Like, the more efficient our system gets for drivers, um, you know, the more that drivers will engage in our platform, and um you know, the more that we can you know, keep driver earnings in a kind of able place. And I think that's the big thing that we've been really pushing for from product perspective, which is how can we bring general kind of stability to earnings. So, Eric, what does Harry Campbell think about some of these new driver programs.

He's a bit skeptical. Uh. He believes there's one thing that can improve life for drivers, and that's more cash. Show me the money. A lot of people ask me what drivers care about, and honestly, drivers are just like everyone else. They care about frankly, their money, right, how much they're getting paid. All of the top articles on my site have to do with how much you can learn how to make more money. When we surveyed our audience, pay was the number one thing and the drivers cared about.

So I mean, I think that anything that can affect a driver's bottom line, and you know, if I'm sitting at Uber, those are the things that I'm looking at. So, Brad, let's get back to Sophia Newali and the Unicorn of San Francisco. Is Sophian still drive? He is still driving. In fact, I took a ride with him recently. He's still a faithful Uber Black driver and he's starting to work on a book sharing some of his tips about driving for Uber. And whatever happened to the unicorn. The

unicorn actually met a tragic end. Here's Sophia describing to me what happened on a faithful Easter two fourteen. So the Unicorn. That was a very sad end of story for the Unicorn. So one of my drivers actually, so this is what I do with my drivers when they have any problem with with their car, at their own car that they are driving, I just decided to give them my car, which is the Unicorn. Of course, I gave the Unicorn for for one of my drivers, and

I got his car to some maintenance. And I remember the day when I when I gave him the unicorn. I said, hey, please take care of off my baby and he said okay, yes, And two three hours later, oh no, he called me and then he said, I gotta, I gotta in an accident. I said, no, please don't. And when I got there, I saw the car and it was it was completely what happened total do you know? So someone It was the night of Easter and some drunk driver runner at laid and this guy hite him,

you know, he hits, he hit the unicorn. Was everybody okay? Everybody was okay? Fortunately, yeah, but the unicorn was totaled. So and from from then I just decided to not to not buy another unicorn, you know. So and then and so ends the story of the white Lincoln town Car. And that was the end, the said, end, story of the Lincoln Tonka. That's sad. Yeah, in a weird way. Sophia accepts it, just as he accepts the changes to the Uber system and seems to understand why the company

made them. Towards the end of our conversation, I asked him one last question, do you ever dream about the Unicorn? To be honest, yes, yes, I like that car. I love that card, but it's a sad story at the end of story. But I loved it. I loved the whole experience, you know, So the whole experience was just beautiful, beautiful, So no regrets, Eric, when all of a saidden done.

Do you agree with Sophion, do you think Uber has been a generous steward of this powerful platform for drivers, or to put in another way, has Uber been a benign dictator in the taxi world? I don't think I would ever use the word benign to describe Uber. I mean,

they're sort of ruth lists, economic marketplace optimizers. You know, it's how can we get the most number of riders and drivers, And so when that's meant that they were getting plenty of drivers and not enough riders, they would lower the fair, attract riders, and make life a lot more difficult for drivers who are hoping to pay their bills. Yeah, I think that's right. I think for a long time

the flywheel at Uber started with fares. If they lowered fares, they increased ridership, they put pressure on competitors, and they drew drivers to them. The problem is, and we both saw this over the past few years, it alienated drivers, even if they were making as much or maybe even a little more money. And I don't know that that was the reality. They saw the decreased fares and they got mad and they protested, and Uber over over time kind of developed a little bit of a poor reputation

with some of its hardest working drivers. And now obviously they're trying to improve it. But I'd like to point out one more problem on the horizon. Uber probably lost three billion dollars globally in rebillion, and that's of course counting the big China competition that they basically surrendered on right, and they're losing money in the United States. So looking at those numbers, you might think Uber is pain drivers too much. Uber will need to do something about costs.

Is this where we say only time will tell? Only time will tell? Hey, guys, it's acky. I co host and helped produce this podcast. And as we were about to publish this episode, a series of things happened that made consumers question Uber CEO Travis Kalenik's relationship with President Trump and also Uber stands on Trump's executive order banning visitors from certain countries. I'm sure you all saw the

hashtag delete Uber trending over your social media feeds. We ended up running out of time to discuss this in the depth that it really deserves, but our episode next week is going to be all about this, all about the executive order, the tech industry's response to it, and what it means for the companies that we cover going forward to stay tuned, and that's it for this week's episode of Decrypted. Thanks for listening. Tell us what you

thought of the episode. Send us a voice message to our producer Pia at p G A D k A r I at Bloomberg dot net, or write to me on Twitter. I'm at Eric Newcomber and I'm at brad Stone. Remember to check out my new book, The Upstarts How Uber, Airbnb and the killer companies of the New Silicon Valley are changing the world. Available from Amazon dot Com or your friendly neighborhood bookstore That's really shameless red another book blog. Okay,

I know, I know. You can subscribe to Decrypted on iTunes or wherever you get your podcasts and leave us a rating and a review helps more listeners find our show. This episode was produced by Pa got Kari Magnus Hendrickson and Liz Smith Alec McCabe as head of Bloomberg Podcasts. We'll see you next week. Don't let your legacy I systems cost you money, innovation, and a place at the digital table of the future. You can change your systems and the economics of it with software from red Hat.

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