Uber’s IPO will give the ride-sharing phenom a market cap between $90 to $70 billion range. That could put the brash ten-year-old ahead of companies like Time Warner, Fox and FedEx. But admission into the blue-chip club requires more than capital.
The company needs to also gain the respect of a skeptical public.
Wealth Is Passé
Two days before the IPO was scheduled, a Los Angeles based group of Uber drivers called Rideshare Drivers United told NPR: “We are asking the public (to) support drivers in their struggle for fair wages and our Drivers bill of rights,” according to spokesperson and member Brian Dolber. Although the movement wasn’t a groundswell, it demonstrated that Uber might be worth a $100 billion, but it still doesn’t get respect.
There is a larger story here and it cuts to the heart of why the American public holds business in low esteem. According to the “honesty and ethics in professions” survey of the Gallup Poll, business executives have less credibility than lawyers, journalists, or labor union leaders. The consequence is that when the media reports on a CEO scandal, the public isn’t interested in the other side of the story.
There are two primary causes. Consider, the last time the American economy was better than it is now was when you were too young to vote for the presidents who presided over it. Ironically, a stellar economy hurts more than helps. According to BBC’s Reality Check, American unemployment stood at 3.7% last September, the lowest it has been since the ’60s. Unemployment for black Americans fell to 5.9%, a figure not seen since Richard Nixon was in the Oval Office. GDP growth rose to an annual rate of 4.2%, higher than any time since Eisenhower and JFK. Today, the average income in America is nearly $120,000 for a married couple, according to the Census Bureau.
And the second problem is a consequence of the first.
The public is so used to affluence, and it acts like Yankee fans who only go to see the big games because a mere win isn’t exciting anymore. We expect affluence. So the public now wants something more.
The Prestige Economy
In a prestige economy, money is just another currency, of which ‘status’ and celebrity have the highest value. It explains why Uber drivers feel free to strike and embarrass the company. Although the drivers realize this is the best job he or she may have at a time in their lives when they need money and flexibility, the power has shifted from the elite bosses.
CNBC shadowed an Uber driver and discovered his annual salary was $72,000 a year. While the hours are long, the driver says, “the flexibility that comes with being your own boss makes up for the long hours. As the father of three, (I schedule my) day so to be home in time to pick kids up from school, help with homework and have a family dinner.”
Even the employee rating services give fairly high marks. According to Glassdoor, an Uber driver’s job is rated at 3.0 compared to 3.1 for Allied Irish Banks and 3.2 for Suntrust Bank out of Atlanta. The employee rating at Indeed is 3.7 or four stars.
So why the protesting? With unemployment so low, elite bosses look like money grubbers and employees are more sympathetic to a media starved for virtue, another currency in the prestige economy. It’s a phenomenon that is happening across the business landscape.
The CEO Pay Problem
CEO bashing begins when the compensation tables are released during proxy season. The media reacts like a weird neighbor has won the lottery. Compare that to Oprah’s net worth of over a billion dollars. Or the Obamas speaking circuit nets a cool hundred million. Why is that okay but a CEO’s salary is akin to blood money?
Many in the business community are ignorant of a change in the zeitgeist from a power economy to a prestige economy. At one time, creating value through the forces of commerce was the ultimate achievement as it led to jobs. Everyone benefitted, including the most impoverished. With affluence all around us, we seek a different kind of currency than a bank account. Jobs are a dime a dozen now, and it is why people leave them after six months without compunction.
What matters more today is the status of the individual, preferably as a celebrity or someone with the kind of qualities that make an Instagram post recognizable. While wealth can enhance the overall effect, it is only an ingredient.
Nobel Prize For Business
There is no Nobel Prize for business, although Alfred Nobel was a great businessman. And if there is a winner of the business achievement award, if you consider how far Uber has come from its early days, its “rags to riches” story deserves one. The problem we face in the business world is we are all about rewards, but nothing is ever done about “awards” which signify status and respect of society.
If you think of Uber as a lab experiment and its founders as scientists, it deserves the Nobel Prize. From its earliest days, Uber weathered more crises than a beach house on the North Carolina coast.
It was called UberCab.com when it first tested the service in New York with three cars before launching in May of 2010. An early CEO was demoted a few months later in favor of Travis Kalanick. That same year, San Francisco sent the company a “cease and desist” order to protect the taxi business. The company faced resistance from municipal politicians who were well-oiled by the taxi medallion owners. The Chinese forced the company to sell its China subsidiary. Then in 2018 in Phoenix, Uber’s autonomous vehicle tragically collided with an errant pedestrian. There was an infamous blog post about Uber’s male sexist culture, which cost Kalanick his job.
Rags to Riches to Raves
The reason the company may soon be worth over $100 billion isn’t the love of money. If that were the case, this would be the longest of long shots ever attempted by a pair of founders who were rich before they started. When Uber was small and ugly, the media could have supported it, but did not. Few investors joined the rally at the time. Potential employees turned away job offers or demanded pay and benefits far beyond the norms. The founders did what they had to do to survive.
That is why before anyone demands that they share in the lucre, first ask, what risks have you taken? Because the prestige economy is right: business isn’t just about money. It’s about betting on yourself and your ideas when no one else would take a chance.
That deserves more than a payday. It deserves an award.