Since the birth of Uber in 2009, it’s been disturbed with series of controversies but asides this it has served as a model for many startups. Many start-up companies with the same model started showing up in the economy once they noticed it is a promising venture. Since then, there have been many start-up companies with the Uber business model but in different markets.
What this generation of capitalists do is put together a labor pool that render a service, find people who need these services and find a very easy way to connect. This is mostly achieved by tapping a few buttons on a smartphone. The convenience with which consumers were getting their services and the flexibility of the labor pool drove these companies at the beginning.
It is now over a decade since Uber took off and it seems capitalists are no more as hyped by the business model like they used to be. Looking at a record of many of the companies that took advantage of the business model since then. It can be deduced that in the United States, these companies represent $7,400,000,000 in the venture – capital investment. These records do not contain all companies that have imitated this business model but it represents a large chunk of them.
Of these companies, four have gone on to be very successful with worth over $1,000,000,000 and they are all in delivery markets. 19 of these companies have been acquired by other companies, 53 are still existing but just struggling without significant growth. Some are not even functioning and just keep making losses year in year out. And, 28 of the companies have closed down. Asides the four above a billion-dollar in worth and the many failed and struggling ones, there are a few who are doing well and worth close to a billion-dollar too.
Although these companies as a whole have employed a large labor force, most of the labor employed is more like gigs instead of actual jobs. These companies have changed the whole service delivery scene by integrating service deliverers into the tech scene. Consumers due to the convenience now willingly submit to middlemen when in need of handymen, cleaners and others like that even though they know these middlemen take a large cut off the pay. The service deliverers are also left with no choice but to submit to these middlemen as they are now the easiest way to get clients. In the long run, as the competition increased, some of these middlemen have had to adjust by reducing the number of customers pay and increase the amount paid to the service deliverers so as to be ahead in the markets. Some of these venture capitalists go as far as paying minimum wage or at least close to it even though the jobs are not regarded as actual jobs but gigs.
As a result of this compromise, many of these companies are taking big hits and are not making profits. This venture which seemed so profitable in theory and at their beginning now seem like they can not be profitable as more of these companies keep closing down or get acquired as a result of heavy losses.
