When principles trump price and convenience (updated)

As Uber CEO Travis Kalanick settles down for some shuteye ahead of Donald Trump’s first business advisory group meeting in Washington tomorrow (Friday), there may be a couple of things that are keeping him awake.

UPDATE 3FEB 0900 GMT – It has now emerged that Kalanick has resigned from Trump’s business advisory group.

In an email to Uber staff he said:

“Earlier today I spoke briefly with the President about the immigration executive order and its issues for our community. I also let him know that I would not be able to participate on his economic council. Joining the group was not meant to be an endorsement of the President or his agenda but unfortunately it has been misinterpreted to be exactly that.”

Firstly, how to diplomatically raise the issue (see above) of the US president’s travel ban on people from seven predominantly Muslim countries, a promise he made on Facebook earlier this week after the hashtag #DeleteUber‬‬‬ trended to the top of Twitter.

Secondly, and perhaps more interestingly, whether the social media storm of this past week has any real implications for Uber’s position in the ground transportation market.

Just to recap, Uber’s misconduct – in the eyes of its anti-Trump users  – was a misjudged tweet posted shortly before a strike called by New York Taxi Workers Alliance, whose members include 19,000 largely Muslim and immigrant members.

The union had urged all drivers in the city – including those of the iconic yellow cabs, as well as Uber and Lyft  – to put the brakes on service to-and-from JFK for an hour last Saturday evening ‘in defense of the oppressed’.

But two hours before the strike got under way, Uber turned to Twitter to inform riders that it was dropping surge pricing but would continue to send drivers to JFK.

 

This sparked outrage among Uber’s anti-Trump followers who accused it of choosing to ‘profit off refugees being consigned to hell’ and called on people to delete the app, a storm that quickly spread to other social media platforms.

Kalanick was already feeling the heat for his decision to sit on Trump’s business advisory board, a move he defended “in the belief that by speaking up and engaging we can make a difference”.

Kalanick is one of numerous high-profile chief executives to agree to this including Tesla’s Elon Musk, General Motors’ Mary Barra, Pepsi’s Indra Nooyi, Disney’s Bob Iger and Jack Welch, the former chairman of General Electric.

To be fair, Uber moved quickly to mitigate the damage, including a tweet that said it had not intended to break the strike, would compensate drivers caught on the wrong side of the border and would raise the issue with Trump at the meeting tomorrow.

But that did not stop large numbers of users deleting the app, a process Uber was forced to automate by Monday evening, according to the New York Times, after it faced more criticism that this was unnecessarily difficult to do.

By Monday, reports came out that  rival Lyft had surpassed Uber to become the fourth most downloaded free travel app in the App store [though the same wasn’t true on Google Play]. Lyft had pledged to donate $1million to the American Civil Liberties Union and said it would ‘not be silent on issues that threaten the values of our community’.

But things are never quite as straightforward as they seem.

The #DeleteUber‬‬‬ camp seems to have missed that financier Carl Icahn, who invested $100 million in Lyft, was an early and vocal supporter of Trump on the election trail.

In response to this criticism, Lyft is reported to have said:

“We don’t always agree with our investors and aren’t afraid to say so. We do respect their right, and that of every American, to freedom of expression”.

What does a business stand for?

While many social media experts argue that the #deleteuber storm will likely blow over within a few days, it raises some interesting dilemmas for consumer-facing travel businesses.

Del Ross, a senior advisor to consultancy firm McKinsey, has this to say:

“For a long time, companies avoided having a point of view. Not so anymore, but that’s not necessarily a Trump thing.

“Today companies are not evaluated or perceived on what they do but what they are about. You have an articulated position on your role in the universe, aside from the service you provide.

“There is a risk to that but it is something we are going to see a lot more of as we move increasingly beyond a purely transactional mindset.”

It could be argued that Uber’s position last Saturday was that people needed transportation and it wasn’t helping anybody to disrupt the ability of travellers to get to and from the airport.

Fair enough? Perhaps. But risky too!

Admittedly though, this isn’t the first time that Uber hasn’t been the centre of controversy. “Uber ignore most things, including the law, that’s their style,” says Jodie Cook, MD of JC Social Media, one of Forbes’ 2017 30 under 30 social entrepreneurs in Europe.

The big question now is will the social media uproar have any implications for Uber’s business?

Bill Beckler, cofounder of metasearch alltherooms.com and former director of innovation at lastminute.com, has this to say:

“This Uber story has powerful implications for the future of ground transportation. First, Uber’s business model, which involves incurring heavy losses now in the hope that ‘market clout’ will pay back in the future, assumes that there is a momentum effect based on their market share.

“This assumption is refuted if people are willing to switch to Lyft based on Uber’s ‘morality’ issues.

“If switching is so easy for customers, and the companies are viewed as comparable today – even though Uber is 10x bigger – then it is game over for this ‘market clout’ concept.

“I think a lot of people are realising that Uber won’t be a monopoly; this recent incident is another data point proving just that.”

Whose side are you on?

Some big names in travel have taken stands on the Trump travel ban –  Expedia has called it ‘detrimental to business’: TripAdvisor has said it is ‘heartless and discriminatory’; Airbnb has offered ‘free housing to refugees and anyone not allowed in the US’.

AllTheRooms has also come out publicly against the travel restrictions and has created a Facebook forum – Travelers for Open Borders – ‘for travelers and travel industry professionals to collaborate around open borders’.

Priceline, however, has remained notably schtum, as have most travel suppliers including hotel chains and airlines.

Despite widespread anti-Trump sentiment, there are polls showing that 49% of US citizens support the ban compared with 41% that are opposed to it. Their reluctance to comment is arguably with good reason, as Starbucks has shown. #BoycottStarbucks also trended to the top of Twitter this week after the coffee-shop chain angered pro-Trump customers with its promise to employ 15,000 refugees.

So are there any lessons for travel companies in all of this?

When it comes to a negative publicity on social media – as Uber faced this week – Cook has this advice:

“In the vast majority of cases, remaining silent and waiting for the storm to pass is best practice, from a PR perspective, especially as any statement given is likely to create more negative responses. It’s pretty much like pleading the 5th amendment.”

Having said that, these are hardly ordinary times, and for Beckler remaining silent isn’t enough.

“Trump has shown time and again that he is arbitrary and enforces grudges but that is all the more reason for principled people to take public stands, otherwise we descend into tyranny.”

From a household name such as Uber, the public is right to expect an official response and on this CEO Kalanick delivered.

Tomorrow, if he is to deliver on what he promised angry users earlier this week he will need to dig deep and draw on his experience of “working with governments and politicians of all political persuasions…to effect change from within through persuasion and argument”.

Given Trump’s uncompromising moves of the past week, he’ll need more than the best of luck. In the meantime, the race for consumer loyalty between the iconic yellow cabbies, Uber, Lyft and others, in places such as New York and elsewhere, is on.

NB: Image by matteodelt/BigStock

https://www.tnooz.com/article/when-principles-trump-price-and-convenience/


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