The growth of Uber has been massive and rapid, and as its current chief marketing officer notes, that level of expansion rarely comes without some challenges. In particular, Uber suffered some bad press, detailing reports of sexual misconduct by its founder and then-CEO, as well as questions about the safety of both drivers and riders who use the service. To address those scandals, the company underwent a major leadership shakeup, leading to several initiatives to reestablish trust in the brand.
In addition to firing the tainted CEO, the company sought to adjust its corporate culture and then, only after it had done so, communicate about those changes to the market. The new leadership implemented new policies for hiring and promotions, as well as new safeguards for rider and driver security. In addition, the new CEO appeared in marketing efforts, promising to continue to improve the company’s efforts. Such promises appear particularly important as Uber gets ready for its anticipated move to go public. Before its initial public offering, it wants to establish a strong reputation, so that it can ensure success and sell more shares.
However, some of those shares will be reserved for a specific population of potential buyers: the drivers who provide the service for the company. Although the precise operations have not been finalized, Uber plans to offer cash bonuses to its best drivers (defined as those who log the most miles or hours, as well as those that have been driving for it for the longest tenures) that will enable them to purchase initial shares, at the opening price.
The choice to provide the cash bonus, rather than just make the shares available for purchase, reflects Uber’s attempt to recognize the needs of its more than 3 million drivers, located around the world. That is, some drivers likely would have a hard time coming up with the funds to make the purchase. Others simply might prefer to keep the cash. Still another segment of drivers, located in overseas markets, are legally prevented from buying stock in the company. Thus, with this cash-based system, Uber seeks to provide equal benefits to its best drivers, regardless of their own situation.
For the drivers that choose to allocate the bonus to shares, there is great promise for future benefits. Even with its recent reputational struggles, Uber has regained a strong position, and it still accounts for approximately 78 percent of the ride service market. Most predictions are that it will have a strong initial public offering, such that shares bought at the opening price are likely to be worth far more soon afterward. By providing such a valuable option, Uber seeks to communicate to its drivers how much it values them.

Discussion Questions:
1. Have Uber’s efforts been sufficient to overcome the bad press it provoked a few years ago?
2. If you drove for Uber, would you buy stock?

 

Source: Nat Ives, “Uber’s Marketing Plan to Put its Scandals Behind It,” The Wall Street Journal, February 22, 2019; Heather Somerville, “Uber, Lyft to Offer Some Drivers Shares in Stock Market Listing,” Reuters, February 28, 2019