California gig-worker bill will speed up ride-hailing's shift to self-driving cars: Early Uber investor

A new proposal in California would turn Uber and Lyft ‘gig’ drivers into employees entitled to some benefits.

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“I think it’s bad, for sure. I mean the unit economics right now are not great, Uber lost $5.2 billion last quarter, they’re still not profitable on each ride,” Tusk Holdings CEO and early Uber investor Bradley Tusk told the FOX Business Network’s “Varney & Co.

According to Tusk, two things will happen if the California proposal becomes law.

“Prices are going to have to increase, that will mean less demand, it will mean consumers will have to pay more money,” Tusk said.

Secondly, in the long run it will speed up the push for autonomous vehicles to replace drivers, he said.

“You might have a short-term benefit for drivers where they’re covered as employees, but ultimately it’s really going to push both Uber and Lyft and everyone else in the industry to try to get rid of the drivers as quickly as possible,” Tusk explained.

On the other hand, Tusk says some "gig economy" startups saw this coming and are ahead of the curve.

“Handy was a really good example of this, saw this and said why don’t we offer portable benefits to the people on our platform,” Tusk said.

But according to Tusk, Uber missed the boat.

“I think Uber put its head in the sand and didn’t really deal with this for years and years when it was obviously coming,” said Tusk.