Uber Investors Feeling Our Pain

In March the U.K. Supreme Court ruled that Uber’s drivers were employees not independent drivers. This expensive reclassification cost Uber $600 million and counting. Uber might be forced to pay holiday time off, pension contributions and more so the story continues.

For investors, this makes it crystal clear on what the true cost of operating under the employee model for transportation looks like. Further, after spending and incredulous $200 million last year to push for VOTE YES on Prop 22 it seems the Biden Administration – who backed VOTE NO on Prop 22 – may cancel out their victory after all that! As reported last week, the new Administration is leaning towards a federal mandate that, like the U.K., ride hail drivers are treated as employees.

To account for these huge costs, Uber announced yesterday that they sold off their self-driving division for $1.6 billion. Selling off assets to pay off debts almost always makes investors jittery and this was no exception. Uber’s stock dropped nearly 5% due to fears from shareholders that the company was in for a rocky ride (no pun intended). The shareholders now know that the price for services will go up – just how much has yet to be revealed but as the driver shortage rages on, other big expenditures the company is finding unavoidable are the costs of recruitment and retention. According to Ubers’ CFO, Nelson Chai, “Uber will spend between $450 million and $480 million in the second quarter on marketing to attract new drivers, as it faces driver shortages in the U.S. and Mexico.”

Those are whopping numbers in anyone’s world and is good news for chauffeured transportation. All we want is a fair playing field, right? Well, it continues to look better for us as time catches up to the ride hail model. Can you imagine if Uber’s services were more expensive than ours? That is becoming a distinct possibility with each passing day.

Uber Takes Another Lick’n, Will They Keep on Tick’n?

As if the driver shortage isn’t bad enough for surface transportation businesses, Uber and Lyft stocks tumbled yesterday on the heels of a statement from Biden’s Labor Secretary Marty Walsh. Now spread over all the front news pages, Walsh told Reutter’s that Gig Workers should be classified as employees.

This labor classification fight has been long and contentious but it’s been held to the state levels until now. If the pro labor Biden Administration decides that the balance of wealth is unfair – and it won’t take much to figure that out given the extraordinary salaries at the top of Uber and Lyft as compared to the meager sums dolled out to the drivers, a federal reclassification could be eminent.

For the first time in their 12-year lifespan, Uber and Lyft’s business models are being scrutinized by the Federal Government and if it’s determined that their driver base must be classified as employees, Uber stands to incur about $500 million (Lyft $200 million) or an extra 30 percent more in overhead per year.

Welcome to our world. While the Taxi industry has a longstanding exemption carve out, we in the luxury segment do not. Uber and Lyft entered the transportation market in 2010 and by 2013 had taken away more than 50 percent of our business travel market share all because of three things. Better technology and deliverability, for sure, but those were problems we could catch up on and solve. No, the biggie was price. They not only undersold our services they trained the business traveler to distrust us because they undercut us by so much. That had a profound impact on our client relationships and was the beginning of the erosion of our bread and butter – airport runs.

We may be seeing a change in the wind. In California, Uber and Lyft spent $200 million on ads to convince the public that voting YES on Prop 22 was a good thing when it wasn’t. Their testimonial ads focused on the driver pool that is indeed part time, such as students, making it seem that all the drivers were FOR the independent contractor model. The truth is the career drivers (those that are full time) are the ones that want the stability of being employees. Because of Prop 22 which collided with the Pandemic shut down, this demographic of driver is abandoning the transportation industry which has totally destabilized Uber and Lyft. The driver shortage is very serious problem. However, it affords us a good lesson - Take care of your people or someone else will.

Now that the Federal Government is getting involve with this labor issue, this is no longer just a state issue but a national hot button topic. It’s going to get very interesting to be sure and perhaps give the GCLA a new argument for the state of California.

The Home Stretch Is “Finally” Here…

This week I attended the International Association of Transportation Regulators virtual conference. I learned a great deal – especially about what the GCLA is doing well. Our association is on the right side of the VOTE NO on Prop 22 campaign. I sat through a session facilitated by Edward Escobar, head of the Alliance for Independent Workers and truly appreciated hearing the different perspectives and why Ubers business model is truly so damaging. I realize it’s odd to be sitting at the table with regulators and unions, but hey, we’re on the same page with this issue and I am proud that we’ve been able to come together in the fight for fair business practices. They may come from the labor side, while we come from the owner’s perspective but we are working together for the common good and that is forward motion.

Prop 22 is in a dead heat right now. Uber, Lyft and Instacart have spent $200 million against our Alliances’ $10 million ad spend. It’s the David and Goliath story to be sure. And, just 5 days in front of the election we are tied. It is anyone’s win. So, what does that mean? It is ALL about voter turnout. If you want a better tomorrow, to reclaim lost market share to the TNCs, and if your care about fair pricing than you MUST GET OUT THE VOTE. Let me repeat, if you want a better tomorrow, you have less than 5 days to become an activist. It does not matter your party; it only matters in the state of California that you vote NO on Prop 22. If you are not spreading the word, if you are not bringing along your friends and family and their friends and family then guess what? We may lose. Do your part and sound off! No regrets!

The other take away from the IATR conference is that www.SafeCleanRidecert.com is ahead of its time and right on the money. This is a hygiene safety certification for frontline employees that will absolutely save your butt in case of legal action taken against your company should you have to defend yourself in a liability suit. I attended session after session with experts who reinforced the importance of training and moreover having proof that your company is taking all the right precautions. The GCLA was quick to endorse SCR and for all the right reasons. California is a state with 40 million residents. Governor Newsome is hyper-focused on Covid 19 and its impact. SafeCleanRidecert.com is enthusiastically lauded in all transportation verticals. Moving people is what we do and there can be no chances taken – now or into the future. Join the smartest companies in the business and get your drivers certified.

We are doing what we can to get through these tough days and praying that the election changes the protectory for 2021. GCLA has been working extremely hard for California livery companies in an effort to ease your burdens. There are a few stand out people that need to take a bow…Mark Stewart (CLI), GCLA legislative chair, is your guy when it comes to Prop 22. He volunteers around the clock and handles all the Vote No marketing. I’m afraid to ask him how many FREE hours he’s accumulated but its in the hundreds, just in the last few months. He is flanked by David Kinney (API) also on the legislative committee. Mo Garkani (C.O.T.S.), the GCLA president also must be recognized. He is on the phone day in and day out fighting for California. When he’s not on a virtual call, he is at the airports working on behalf of all of you or serving literally every committee we have!

This next week is so important. We need everyone to push the Vote NO on Prop 22. Get loud and proud. Let’s GO GCLA!


—Sara Eastwood Richardson

GCLA - Year in Review

"Never Doubt That A Small Group of Thoughtful, Committed Citizens Can Change the World; Indeed, It's the Only Thing That Ever Has.”
—Margaret Mead

This was a very busy and very exciting week here at the Greater California Livery Association. The board of directors met Tuesday for nearly three hours to hammer out strategies ranging from Prop 22 to ending the year with a face-to-face meeting for our entire membership.

Here’s an update that I know you’ll find enlightening:

On Government Assistance: The HEROS Act was revised to $2.2 trillion. Democratic lawmakers introduced the measure on Monday with Treasury Secretary Steven Mnuchin. It is unlikely to pass before the November 3 election. Operators wanting information on the PPP loan forgiveness program must first apply for that at https://www.sba.gov/document/sba-form-paycheck-protection-program-loan-forgiveness-application.

On the Financial Fitness of the GCLA: The association hit a yearly low in reserves this past July only to rebound thanks to new members, a surge in sponsorships and a $8,500 grant from the National Limousine Association.

On Industry Recover Efforts: The GCLA endorsed the SafeCleanRide sanitation training, testing and certification program. This project was 5 months in the making and we feel strongly that it will play a vital role in business recovery for the state of California and beyond. Go to the www.GCLA.org for more information.

On Board Seats: Our association election efforts for board seats kicks off next week. If you are interested in running for the board and/or participating on committees please reach out to me at sara@gcla.org. I have applications ready to email you right away. The deadline for board applications is closed of business on Monday, October 26th.

On Legislative Work: Vote NO on Prop 22 is our #1 focus. We have retained the Marketing/PR firm of Curtis Gabriel to handle social media strategies. We are part of the www.NOonCAPROP22.com coalition. As of now, the No’s are essentially tied with the Yes’s with 25% of likely voters’ undecided. We set up a GoFundMe campaign to raise money to support the Coalition, who’s set to raise $10 million. Our industry is expected to do our part to support the NO efforts so if you haven’t given yet, please do so! The Coalition is not expecting a huge check from us, they know we are suffering. Our goal is to raise $10,000 for the cause. https://charity.gofundme.com/o/en/campaign/gcla-campaign-vote-no-on-prop-221.

Watch your inbox! Coming this weekend in a GCLA – TV exclusive interview with Assembly person Lorena Gonzalez, the author of AB 5 and champion of the Vote No initiative. This program is facilitated by Mo Garkani, GCLA president along with Mark Stewart, GCLA Legislative Chair. Assembly Member Lorena Gonzalez unpacks the details of this landmark legislation. It is a must see!

On Uniting Our Membership in a Face-to-Face Event: The discussion with the board on whether or not to plan for a 1-2 event that includes business strategy meetings, a state of the industry, awards event and a holiday dinner was met with mixed feelings. Many of us are craving the comradery and human interaction that live events afford us. Some directors are concerned about the optics in light of so much pain and suffering this year. We have dates on hold at the Portofino Hotel and Conference Center, Redondo Beach on December 14-15 just in case but we need a consensus. Directors are reaching out to members by email to get feedback. Feel free to contact me as well and let us know if this is something you want to see happen this year.

In close, I must say how proud I am to be a part of such a fighting and spirited group. This industry represents the best of the true American Entrepreneur. These are extremely difficult times for the travel and hospitality industry but still we forge ahead. We are constantly thinking about ways to get mobility “unstuck” and our efforts are paying off…slowly BUT surely. It is an awesome thing to see backyard competitors who are coming together to support one another in the most unselfish of ways. Together we are better and remember, we are In this to WIN this!

Stay strong!

—Sara Eastwood-Richardson

Unpacking Prop. 22

Unpacking Prop 22

The Uber, Lyft and Instacart $180 million ad campaign launched this month. You’d have to be living under a rock somewhere in the California wilderness to have missed their ads. So compelling was their advertising “story” that many of our GCLA members became disheartened and figured the fight was over. The GCLA had just set up a GoFundMe account to raise money to contribute to the Coalition we joined when pushback from operators ramped up. Transportation owners got spooked about spending good money on bad, and worse, retaliation if Prop 22 should pass. All of a sudden, we felt people starting to pivot on something we’ve worked on for 6 years.

If you re-read my letter to you from last week, I said we had to see this through; we are in this to win this. I want to thank the brave hearts that listened to me and sent money our way so we could continue to fight. We are on the right side of this argument because our business model will never pass the smell test to employ IOs the way the TNCs have been able to do. If anyone thinks they can remake their businesses if Prop 22 passes, you are in for a rude awakening. Uber and their counterparts are suggesting a hybrid version of the labor law and asking the voters in California to bless it. But those voters are now hearing our side of things and feeling queasy about saying YES to something that underserves the drivers they’ve come to care about – especially during a pandemic when so many people are in financial straight jackets. The sob story, followed by veiled threats to stop serving the residents of California created panic at first. But, as reality – and our messaging - is sinking in, people are turning on Uber, Lyft et al.

Yesterday, the LA Times endorsed a NO on Prop 22. The article is critical about the 3rd tier employee model the TNCs created. It boils down to paying 20% less than minimum wage and only half of the mileage standard of the IRS. They receive no sick or family leave. The newspaper sites a myriad of reasons that Prop 22 fails to be worthy of a YES, and we’ve included that story in this week’s e-news so I encourage you to review it. In the end, the voters will decide but as of this week it looks to be an uphill battle for Uber and friends. A new statewide poll conducted by UC Berkeley Institute of Governmental Studies poll shows “that 39% of the 5,900 likely voters surveyed from Sept. 9-15 would side with the companies and vote yes on Proposition 22, compared with 36% who said they would vote no and 25% still undecided. The poll's margin of error is plus or minus two points.”

As for our industry’s support, the ball is squarely on the 50-yard line with momentum swinging our way. You’re our team and now is NOT the time to walk off the field. We need everyone suited up and ready to play – that means whether it’s a $10 or $1,000 or anything in between, you must contribute to the win.

I believe in you and I think we’ve got this!

—Sara Eastwood-Richardson

Why You Should Vote "NO" on Prop. 22

Why Voting No on Prop 22 Is Better for Chauffeured Transportation

The short answer is that we all just want a more fair and equitable playing field. I am a business traveler. Until 2014 I routinely used livery services when traveling. Ten years ago, the price to go from LAX to my headquarters in Torrance (12 miles) was $250 – one way, including fees/gratuities. My company paid the bills as if that was the norm. Why? Because it was. We enjoyed a corporate account with a chauffeured service for years until one day, Uber knocked on our door with a “sweetheart deal” and just like that, our longstanding relationship with the limousine company ended. Fast forward to now, those rates of old seem surreal. Uber charges $50 for that same ride.

Ride Hail businesses crushed us with price because they circumvented our labor laws from the beginning. It was only a matter of time that they’d go public at which point their financials would be on full display (including the $46 million package for their CEO…hem hem). Cast their outrageous spending against the backdrop of a blue-collar driver, who truly clears about $5 an hour, and it really begins to smell like a sweatshop.

If Uber loses this argument because VOTE NO wins, we ALL get to reset the consumer’s expectation on pricing. In other words, we get a very much needed bounce. Uber has vowed to downsize their business model and focus on intercity transportation allowing us to expand our turf - or in some cases reclaim - the suburbs (there’s good money there).

If Uber wins with a VOTE YES they will get a special carve out that we may or may not be entitled to. You can bet that the GCLA is looking at this from both sides and we will be prepared to pivot.

Which is the better path for us in California? Winning the VOTE NO campaign offers more surety that we will be able to increase market share. Further, the demand will be greater than the supply and you know what that means to pricing, right? It goes up. That is better in the long run than if Uber wins. If the YES has it, chauffeured transportation will make the argument that we should get the same deal as Ride Hail businesses but it’s easy to imagine a lot of pushback from the state of California. There are other worries in a YES scenario. Our pricing will likely be pushed down while quality control and liability issues will rise.

The GCLA has worked long and hard to get AB 5 passed and made into law this year. We must see this through with all the muscle we have as an industry. This is our one shot and if we win, rest assured, you are gong to be the beneficiaries of a rebound of business the likes we have not seen.

Every vote counts; yours, your relatives, your friends, your customers. And, with time on our hands there’s no excuse for you to stay on the sidelines. Take action in your community with all you’ve got and use the GCLA VOTE NO slicks on all your emails and social media marketing.

We’re in It to Win It.

—Sara Eastwood-Richardson

Will Uber Suspend California Operations?

Uber Is THIS CLOSE to Suspending Operations in California.
Will that Open Any Doors for Us?

If you think you’re having a tough go at it, be glad you’re not at the helm of the big TNC’s of Silicon Valley these days.

Uber and Lyft, who are suffering a very bad 4 months in the state of California just can’t seem to catch a break. Assembly Bill 5, a new law which went into effect early this year prevents Uber and Lyft from classifying their drivers as independent contractors or freelancers. For several months thereafter, no enforcement happened as the state heard carve-out appeals for other “gigs” such as musicians, who got entangled in the Bill. Uber and Lyft also presented their case for exemption but were denied. This all went on last spring during the Covid-19 shut down that caused the mobility industry to completely stop. By May the lawsuits against the TNC titans were filed, first by Attorney General Xavier Becerra, along with city attorneys of Los Angeles, San Francisco and San Diego and another by California Labor Commissioner Lilia García-Brower.

The drama has ensued. This past Monday, California Superior Court Judge Ethan Schulman issued an injunction on Uber and its contemporaries, compelling them to change IO drivers into employees immediately – well actually they have 10 days. With no time to spare, Uber is heading back to court on an emergency appeal. At the same time, the TNCs in California have vowed to take AB 5 to the people and get it voted down at the polls this November in the form of Prop 22 (they want people to vote YES).

CEO Dara Khosrowshahi stated yesterday that, "We think the ruling was unfortunate. We respect, obviously, the law and the court and the judge," Khosrowshahi said. "If the court doesn’t reconsider, then in California, it’s hard to believe we’ll be able to switch our model to full-time employment quickly, so I think Uber will shut down for a while."

Stephanie Ruhle of MSNBC Live, asked Mr. Khosrowshahi how this this law would ultimately affect Uber’s business model. He replied, "You would get a much smaller service, much higher prices, and probably a service that's focused in the center of cities versus a bunch of the smaller cities or the suburbs that we operate in right now." Lyft stated they too would shut down operations if they were ordered to make the switch to the employee-based business model. Certify states that Uber’s market share within the business travel community is 12% of business expenses (by volume, not value) compared to a 3.5% Lyft market share. Their strongest revenue bases are here in California with San Francisco Bay Area at the top.

So, if the Rideshare companies of California suspend their operations, likely until the election in November, can chauffeured transportation pick up any of that business? Can we start a dialogue (finally) with the leadership of the TNC community and brainstorm on how we can help each other rather than kill each other assuming we’re moving to a more even playing field? If their numbers are to be believed, they generate 2.5 million trips per month in California so if Uber work is currently 75% off, that still means there is 25% that isn’t – or 625,000 monthly rides. If 15% of that is business travel related (our bread and butter) luxury transportation providers in California could reasonably pick up almost 100,000 trips per month. I contend that in a decimated mobility marketplace everything has to be put on the table. We may be catching a big break.

Stay Safe,
Sara Eastwood-Richardson

Filthy Ride Share Vehicles

SURVEY SAYS: RIDE SHARE VEHICLES ARE FILTHY!

A friendly operator in San Francisco reached out to me yesterday to chat about what he is already hearing from his business clients. The message is coming in loud and clear: travelers want reassurance that vehicles are bug free! Clean is definitely the NEW safe. I wrote an opinion piece to the GCLA membership a few weeks ago with that very title. Now, my friends, it’s coming to light just how important cleaning protocols will be for all segments of our lives—the entertainment, travel and mobility industries, even more so.

There is always a silver lining. Ours is in a golden opportunity to win back lost business traveler work to Uber, Lyft and the ride-hail business by marketing our industry as one that is not only safe but certifiably so. We are the sector of ground transportation that is BEST equipped to control our vehicle environments and he/she who can sell that assurance, wins. With the help of the global sanitation industry who is certifying hotels, airports, event centers and more, we are working in overdrive to get the first transportation sanitation program managed by a scientific third party and we are almost there—in fact we even have a name for this program. Getting to this place was no small undertaking. If all stays on track, we will have a roll out transportation certification for the industry within two weeks. We are confident this will appease the California government, and way beyond to our national and international administrations.

How great is our timing? Well, pretty darn spot on. Recently Netquote.com, an online insurance aggregator, published a Driving for Germs study. The article was written by Jacob Geanous of the BBC. Here is his report posted Monday, May 18th:

Insurance aggregator Netquote took swabs of the most commonly touched areas in ride-sharing vehicles such as doors handles, seat belts, and window buttons. They also swabbed the same spots in taxis and rental cars to determine which was dirtier for their ‘Driving with Germs’ study.

The study found that ride-sharing cars had an average of six million ‘colony-forming units’ (CFUs) of bacteria per square inch on those surfaces. Rental cars were found to have approximately 2 million CFUs and cabs averaged just 27,593 CFUs.

For some perspective, there are 171 CFUs on an average square inch of a toilet seat. A toothbrush holder can carry up to two million CFUs and a coffee maker carries an average of 32,000 CFUs.

I am giddy with hope for your businesses. I pray that beyond all this tragedy is a rebound for your businesses that will be exceptional. We are definitely moving in the right direction so stay tuned for more specifics to follow.

Sara Eastwood-Richardson