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MIT researchers estimated median Uber driver profit at $3.37/hour

Four researchers associated with the MIT Center for Energy and Environmental Policy Research studied Uber drivers earnings. Based on drivers’ responses to a survey, the researchers estimated that the median driver earned $3.37 per hour before taxes, and 74% earn less than minimum wage in their respective states. Net of vehicle expenses, 30% of drivers are losing money driving for Uber.

The authors also studied the impact of deductions on taxation of driver earnings. Based on IRS rules about deductability of vehicle expenses, the researchers estimated that 74% of driving is untaxes (because deductions exceed driver earnings).

Uber’s chief economist responded by questioning the researchers’ methodology, including survey questions, driver understanding, and possible errors in analysis. Uber CEO Dara Khosrowshahi responded on Twitter: “MIT = Mathematically Incompetent Theories (at least as it pertains to ride-sharing).”

After criticism, lead author Stephen Zoepf offered a statement agreeing that alternative methods of calculating revenue and profit yield higher profit to drivers, and planning a revision of the paper with this principle in mind. Zoepf also called on Uber to provide more data about driver profits net of vehicle costs and to distinguish actual and tax-reportable vehicle expenses in order to clarify driver true economic profit versus tax subsidies.

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Settled Waymo (Google) litigation for $245 million

After four days of trial, Uber settled claims from Waymo (Google) that a former Google engineer had downloaded files before forming his own company that was later bought by Google. As part of the settlement, Waymo gets 0.34 of Uber’s equity, worth about $245 million at Uber’s estimated valuation of $72 billion.

Discussing the settlement, new Uber CEO Dara Khosrowshahi said his job includes “acknowledging and correcting mistakes of the past.” He continued: “The prospect that a couple of Waymo employees may have inappropriately solicited others to join Otto, and that they may have potentially left with Google files in their possession, in retrospect, raised some hard questions” though he continued to deny that any Waymo trade secrets made their way to Uber.

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Kalanick’s stated objectives for acquisition of Otto

In litigation with Google about alleged theft of Google intellectual property, Google counsel presented notes from John Bares, then director of Uber’s driverless car center in Pittsburgh, from a December 2015 meeting with Uber then-CEO Travis Kalanick discussing:

TK what we want
source
all of their data
Tagging
road map
pound of flesh
IP

On one interpretation, the “what we want” was what Uber wanted from a prospective acquisition of Otto — but notably, what Otto would in turn bring from Google (where key staff had worked previously). In particular, Uber had no fight with Otto and no reason to want a “pound of flesh” from Otto. In contrast, Uber’s tensions with Google were longstanding and well known. In that case, these notes would also indicate Uber intentionally wanting “all of their [Google’s] data” as well as Google’s “source [code]” and more.

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Kalanick defended Otto founder Anthony Levandowski

Against the advice of then-General Counsel Salle Yoo and without support from then-Chief Business Officer Emil Michael, Uber then-CEO Travis Kalanick pushed forward with the acquisition of Otto, a startup for self-driving trucks.

Bloomberg reports multiple reasons why Kalanick could have been concerned about the deal and Levandowski’s tactics.

One, Otto consisted primarily of ex-Google staff, and Uber’s acquisition of Otto angered Google leaders, including co-founder Larry Page.

Two, before the deal closed, Uber’s investigators learned that Levandowski had possessed five disks of data from Google’s driverless effort including “source code, design files, laser files, engineering documents and software related to Google self-driving cars.” Uber’s investigators also knew that Levandowski’s claims to have destroyed the disks could not be verified. Kalanick said he did not read the investigators’ report.

Three, Levandowski asked Uber to protect him from legal attacks from Google, and Kalanick agreed to do so.

Even when Google sued Uber over the acquisition, and Levandowski invoked the Fifth Amendment’s protection against self-incrimination to decline to cooperate with litigation, Kalanick continued to support Levandowski, claiming he would eventually be vindicated.

Bloomberg further reports Kalanick calling Levandowski his “brother from another mother.”

Business Insider adds that Kalanick had vouched for Levandowski. Meanwhile, Emil Michael, then Uber’s head dealmaker, did not support the acquisition because he thought the price was too high.

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Huffington accused of self-dealing

Bloomberg reported that Uber board member Arianna Huffington was accused of self-dealing. For one, she sought to have Uber provide driver hubs with “nap pods” from her new wellness company. Furthermore, Huffington’s new company received $50,000 in consulting fees from Uber, though Uber staff objected to those payments and the funds were ultimately returned.

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Kalanick didn’t abide by leave

When pressed to take leave in response to mounting scandals, then-CEO Travis Kalanick was seen not to comply with the leave. Board member Arianna Huffington was seen as his proxy. Bloomberg reported that Uber’s finance team was spreading the word that Kalanick was still in charge. Among Kalanick’s activities while on leave was searching employee emails to investigate leaks.

Bloomberg reported that Kalanick’s handpicked executive team objected to his meddling while on leave and sent a letter asking him to stop. Business Insider added that a sixteen-person senior management team sent a letter to Uber’s Board, complaining that Kalanick was interfering with their work and asking the Board to intervene.

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