In Search of Uber’s Unicorn

Re:In Search of Uber’s Unicorn by 7Figures2Commas on Tuesday October 28, 2014 @05:44PM (#8523782)

A key difference between Uber and Groupon is that with Groupon, unhappy business owners simply ceased their dealings with Groupon. With Uber, unhappy drivers may be able to inflict far more damage beyond quitting or jumping ship.

Most threatening to Uber's long-term viability are putative class action lawsuits, such as one alleging that drivers were misclassified as independent contractors[1]. If Uber is forced to reclassify its drivers, it could literally upend the economics of Uber's business overnight.

Because of the legal and regulatory challenges it faces, I think Uber is actually in a far riskier position than Groupon ever was and Uber's valuation seems to indicate that investors have too significantly discounted these risks. At this point, I actually think Uber might for some investors prove to be a binary investment. That wasn't even the case with Groupon, which still has a $4 billion valuation despite its decline.

[1] http://uberlawsuit.com/

[ Parent | on HN ]

Re:In Search of Uber’s Unicorn by foobarqux on Tuesday October 28, 2014 @06:31PM (#8524016)

I think the biggest threat to Uber is unionization (or other labor organizing).

[ Parent | on HN ]

Re:In Search of Uber’s Unicorn by 7Figures2Commas on Tuesday October 28, 2014 @07:30PM (#8524412)

While you can join a union as an independent contractor, independent contractors who are members of a union do not have the same bargaining rights and protections as employees who are members of a union. So here too, the classification of Uber's drivers makes a critical difference.

[ Parent | on HN ]