I first met Harry Campbell back in August 2014, long before he was the ride-sharing guy. His first web presence was at www.yourpfpro.com, a financial website for young professionals. And as it turned out, Harry is also a miles and points guy, so we’ve stayed in touch ever since.
Then a few years ago, he turned his time and attention to his new brand, TheRideShareGuy.com. Maybe you’ve heard of him or seen his blog/podcast/Youtube channel. He’s my go-to resource when I have ride-share questions, so I wanted to sit down with him and get his view as both an insider, because he still drives for both Uber and Lyft, and also as a mentor and resource for drivers.
I asked Harry some tough questions, because as a consumer, there’s a lot about the ride-sharing world I’d like to understand. I want, as I’m sure you do, to have the best possible ride-sharing experience, and understanding this from both a passenger as well as a driver perspective helps! Harry’s got a unique window into the sharing economy, so let’s see what he has to say.
Shelli: Is there an over-saturation of drivers (in certain places of course)? Is this why Uber/Lyft can keep cutting back on how much drivers earn?
Harry: Both Uber and Lyft cut rates almost annually on drivers, but they don’t really give very convincing reasons why. They say lower rates will bring drivers more money, but we have not seen evidence for that. Over-saturation of drivers is definitely an issue, but so is Uber’s burn rate of drivers. In 2015, Uber announced nearly half of its drivers quit after one year, but so far it doesn’t look like as though the pool of drivers will let up. Flexibility and the ability to earn money on your own time is tempting for a lot of people, even though Uber and Lyft cut rates.
Shelli: Do they have the same problems with ride sharing overseas or is it unique to the states? Many places overseas have way better public transportation than we do, creating less of a need for Uber-type businesses.
Harry: Ride sharing is very different overseas and we can see from some of the recent lawsuits over there that Europe is trying to regulate ride sharing much more tightly than it is regulated in the US. If Europe succeeds with these regulations, this would mean more burdens on Uber in terms of labor, safety and compliance with local laws in Europe. That said, Uber has opened in more than 300 cities on 6 continents, which has helped the American tech company reach a valuation of $68 billion.
In China, Uber recently got out of the ride sharing business and sold its China operations to rival Didi Chuxing. Uber simply couldn’t compete against Didi, which was more established in China, but Uber continues to look to expand into Asia and India. In other countries, there are local versions of Uber and Lyft or, like you mentioned, more robust public transportation than in many major US cities.
Shelli: Given all the press Uber gets about using millions (could be billions by now) of investor money and still not making any money, how do you, the financial pro guy, see the business model? Is it viable?
Harry: This is really a $69 billion question. $69 billion just happens to be Uber’s valuation in its most recent funding round, making Uber the most valuable startup in the history of the world. While it’s valuable, as you point out, it’s not profitable. According to figures obtained by Bloomberg, Uber last year lost more money – over $2 billion – than any startup in history. The question of sustainability is the real issue facing the company now, and there are arguments for each side, depending on your perspective.
That perspective really centers around drivers, investors, executives, and even passengers. Everyone is getting something different out of Uber, but Uber only ultimately succeeds if it is profitable. For passengers, almost everyone now has heard of Uber, which gives it great market share. This is good for executives too, but one thing weighing on executives is Uber’s razor-thin margins and overall losses. The fact that Uber lost over $2 billion in fiscal year 2015 is pretty clear evidence they’ve already dug themselves in pretty deep. In the vernacular of Wall Street, Uber executives short term goal is simple – they must convince investors they’re not throwing good money after bad.
Investors need to see revenue and income, and so far they haven’t seen much of either. Unless Uber (and Lyft) can somehow demonstrate that their business model works, then as soon as investors wise up and stop throwing good money after bad, then Uber (and Lyft’s) days as the darlings of the startup world could be numbered. How much longer can this continue? The answer is simple: it can continue until Uber runs out of investor capital or until they start turning a profit which, from the looks of things, could be much longer than investors may be willing to wait.
Shelli: What are your top 3 tips for creating the best ride-sharing experience possible?
Harry: For drivers, the number 1 thing to do is to provide a safe, clean, quick (within legal limits) ride. It seems really simple to say, but a lot of riders want to get to their destinations with minimal conversation, in a nice, clean car in the most efficient way possible. That alone should always get drivers a good rating!
For drivers, number 2 is to always know where you’re going and make sure you have the juice to get you going there (for you and your passengers). The top two things we recommend all ride share drivers get is a phone mount (for safety) and charging cables, both for your phone and your passengers’ phones. It goes a long way to be able to offer something to passengers, and cables are a great thing to offer your passengers and helps drivers out too.
For drivers, number 3 is to be thoughtful. When you’re on your way to pick up a passenger, text them and let them know you’re on your way. When they get in the car, greet them and be courteous when they tell you where they’re going. If they want to give you “better directions than the app”, let them. Pick up on cues, like if they want to be left alone or if they want to chat with you.
This has always been my number one piece of advice for new drivers: be a passenger and learn what it’s like to see ride share driving from the passenger’s experience.
Shelli: Excellent information, and I can’t thank Harry enough for his time and generosity in answering my questions. If you want links to any of the things Harry discussed, let me know. And of course Harry can be found at TheRideShareGuy.com.
Did you find this conversation useful? Learn anything new? Got more questions for Harry? Let me know in the comments below!