THE INC. LIFE

The CEO of Uber Just Made a Stunning Request: Please Slap a Big Fee on Our Customers

It’s an unusual proposal: the CEO of a disruptive company wants his customers to bail out one of the industries he’s destroying.

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BY Bill Murphy Jr. - 13 Jun 2018

PHOTO CREDIT: Getty Images

This is a story about ride share services like Uber, legacy taxicab drivers, and a surprising suggestion.

There was a time when a New York City taxi medallion was a very valuable thing.

Without a medallion, you can't legally drive a taxicab in New York. And with only 13,587 medallions out there, the cost of medallions on the secondary market was sky-high: Hundreds of thousands of dollars--even a cool $1 million.

So, some people borrowed massive amounts to buy them, pooling their savings and mortgaging their houses.

And if they did so in the last few years, they turned out to have horrific timing.

Taxis and Uber and Lyft, oh my

The rise of Uber, Lyft, and other ride sharing services meant instant and overwhelming competition against taxis.

Some cabbies wound up committing suicide, apparently as a result of the degree to which their life's investment had plummeted in value. The New York Post wrote earlier this year about drivers hanging and shooting themselves after watching their assets plummet to 20 percent or less their original value.

It's a sad story. People are enamored of the idea of disruption when we talk about entrepreneurship, but it's no fun at all when you wind up being the one disrupted.

But now, the CEO of Uber, Dara Khosrowshahi, has come up with a surprising solution.

'A hardship fund'

Khosrowshahi is suggesting that the city of New York should impose a fee on Uber customers (and, one assumes, customers of other similar services), in order to bail out the people who bought taxi medallions only to crash straight into the ride sharing economy.

"In circumstances where medallion owner-operators are having a hard time, where technology has changed and demand patterns has changed their environment, we would support some kind of fee or pool to be formed, a hardship fund, call it," Khosrowshahi told the Post.

"If we can be a part of a solution to make things better to help get some of these owner-operators get out from underwater and to continue making a better life and to make a decent life and to help themselves," he continued, "we want to do that."

Just damage control?

So, what to make of this? Some taxicab drivers and advocates weren't all that impressed, surmising that Uber is just trying to put a band aid on the medallion problem.

They think the company's ultimate goal is to to avoid having tighter regulations, and especially avoid having a limit on the number of people who can drive for Uber in cities like New York.

"It's too late for his damage-control tour," New York Taxi Workers Alliance executive director Bhairavi Desai told the Post.

Also, one notes that Khosrowshahi is suggesting that the funds be collected as a surcharge paid by customers, not a fee paid by Uber or its drivers. There's an argument that it doesn't matter of course, and that no matter who pays it, the fee will wind up passed along to customers.

Still, regardless, it's an interesting idea--even if I don't really want to pay a surcharge myself every time I take an Uber, to bail out people who made bad business decisions.

But find me another entrepreneurial venture in which the disruptors ultimately decide to take up some kind of collection for the disrupted. It's a wild idea--and one you won't likely see that often elsewhere.

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