Uber: “Criminal Enterprise” or Innovative Leader?

Uber Technologies Inc., a popular app-based transportation network, is quickly becoming one of the most controversial businesses of this decade.  Among millennials, Uber is a popular transportation mode – easier, quicker, and cheaper to use than normal taxis.  However, traditional taxi drivers, taxi cab companies, state insurance agencies and law enforcement officials are taking Uber to task.  Recently, a Philadelphia cab company called Uber a “criminal enterprise” in a lawsuit seeking to block the on-demand car service from operating in the city.

Is this a case of a traditional modeled business lashing against an innovative, disrupting company – or is there any legitimacy to the cab companies claim?

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After raising $1.2 billion last month, Uber is currently valued at $40 billion (which, hypothetically, makes it more valuable than Delta Airlines, CBS, and General Mills).  At that kind of valuation, the company will be the target of much scrutiny.  In the case in Philadelphia, cab companies are arguing that only taxis that have a certificate of public convenience and a medallion valued at $520,000 are allowed to operate in the city – which Uber does not comply with.  In other cities, there have been other disputes about insurance requirements and whether or not Uber carries adequate insurance protection.

Is this a smear campaign or are these legitimate concerns?  One thing is clear:  nothing is clear when an innovative company leveraged with investor’s capital disrupts an industry and operates prior to getting approval from regulatory agencies.  I do not know who is in the right or wrong nor whether Uber is a ‘criminal enterprise’.  We’ve written extensively about the insurance implications with ride-sharing companies previously (read here).  Regardless of how this plays out, it’ll be a fun ride.

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