Did California Just Wound Silicon Valley?

Uber has started a trend in the startup industry. You’ve more than likely heard the phrase, “It’s the Uber for ____”. In fact you’ve probably seen it on our very own site. It’s the simplest way to explain the current fad in creating companies that do things for you. So why is Uber’s business model so popular? Well simply put, it works. It’s the most logical step for a taxi service, but I don’t think that’s it. Uber created an easy work around the business model. Here’s a way to provide a service without getting stuck with the difficulty of having employees.

We love it. We love the idea of working for ourselves. We love knowing that when we want to flip our work clock on, we can. We love knowing that we can grab a cab easily and can avoid all social awkwardness. Uber provided a world that we thought we wanted and made us believe it was all for the better and many companies have fallen suit. Luxe provides contracted Valet. Postmates provides contracted delivery men. Urgent.ly provides contracted road service. It’s the easiest way to get a job and the easiest job environment.

So why is California against Uber’s model? The ruling fell on Uber’s lap through the words of the Commissioner during a dispute from driver Ann Berwick. Uber controls every aspect of the operation. Uber decides when the driver is no longer allowed to work for the company. Uber decides how the driver should perform the job, etc. On the other hand, Uber insists that the ability for drivers to choose their own hours, use their own cars and have as many other jobs as they want deems them contractors. The Uber service is simply a platform.

Barbara Ann Berwick in San Francisco is ruled as an Uber Employee

So why does it matter? Well the ruling could change Uber’s business model dramatically. Ann Berwick’s awarded $4,000 might be more expensive than simply employing drivers in the long run. The system is crippled with this ruling. It forces Uber to reconsider whether they’re willing to risk another trial of the sort. It risks the pricing as the service will start to be more expensive to manage and brings up more and more difficult aspects to managing employees such as HR, insurance benefits, social security etc.

If Uber fails to appeal, the Uber of everything will have to rethink their business plans and Silicon Valley will desperately need a new fad.

Do we want a new one? Are we comfortable with Uber’s business model? Do we want jobs to be created that allow us the amount of flexibility that Uber does. Are we willing to sacrifice the benefits of having an employer for the ease of being a contractor?

What do you think?

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