Uber, originally UberCab, started as an app for hailing only black luxury cars. It was founded by Oscar Salazar, Garret Camp, and Travis Kalanick in March 2009 in San Francisco, U.S.A. It is registered under Uber Technologies Inc. and has an employee count of 29300, according to Forbes. The company enjoys several Global acknowledgments, including America’s Largest Private Companies in 2019, Canada’s Best Employers of 2019, and the Global 2000 companies. It operates in more than 900 cities worldwide with an enterprise value of $56.21B.
Its first CEO was Ryan Graves, the first Uber employee who started as a General Manager and CEO shortly after its launch. He was succeeded by Kalanick, one of the founders, in 2010. Seven years later, Kalanick was succeeded by Dara Khosrow Shahi, the current CEO and former CEO of Expedia Group, who has overseen massive expansions and operations mergers, including partnerships with Yandex. Taxi and Grab.
Mission And Vision
Uber intends to reimagine the way the world moves for the better and, in doing so, make transportation as reliable as running water- everywhere for everyone. It grants access to rides at the touch of a button, changing how people, goods, and things move through cities. Some of the commitments that can be drawn from its mission statement are improving lives, exceeding expectations, and making transport as accessible as possible.
As for its vision, Uber aims to ignite opportunity by setting the world in motion, evident from its diverse offerings. Its convenient services make people’s lives easier by allowing them to get to places easily and enjoy fast deliveries.
How Uber Works
Now that we have given you a brief history of Uber and its mission and vision, it’s time to find out how this multi-million-dollar entity works and sustains its employees.
Uber has several services which can be accessed at the touch of a button. The most popular is Uber Rides, which allows clients to set their pick-up location, select the ride they need, and pay using different methods. As soon as a ride is requested, the app’s algorithm identifies drivers closer to their pick-up points who can either accept or turn down their request. The status of each driver is stored, and the available data is used to set ride prices and predict supply demand.
The platform also uses telematics by leveraging the driver’s phone gyroscope, GPS, and the car’s accelerometer to determine driving behavior. Services such as Uber Eats also work similarly, just that it’s good/grocery being transported and not people. The customer picks a restaurant and the food they want, keys to the right location, and waits for delivery.
Uber’s Key Partners
Uber doesn’t own cars or restaurants and therefore depends on the following people/entities for its success:
1. Drivers
Drivers are one of the most important partners in the Uber Business Model. They are on the supply side and must be adequate in number for the company to sustain timely pick-up at relatively lower costs. Drivers are often allowed to join and leave the network at any time, provided that they give a moment’s notice.
2. Restaurants
Uber owns UberEATS, which is an online food ordering and delivery application. It partners with restaurants, who, just like drivers, can choose to join and leave at a moment’s notice. This service became more popular during the pandemic and remains one of the most lucrative Uber ventures.
3. Commercial partners
Uber has partnered with several corporates and commercial partners for different reasons, but mostly to enhance loyalty, promote easy pick-up/drop-off, and widen its local markets reach. Some of these include airports, malls, and attractions, which are crucial pick-up/ drop-off points; commercial partners such as American Express, PayPal, and hotels that offer additional sales channels and shared rewards and lastly, loyalty program partners such as airlines and tiered rewards programs.
Other important partners include cities, technology partners such as UberX Share, formerly known as ExpressPool AI companies, and investors/ venture capitalists who were crucial at the company’s beginning.
Uber also greatly relied on lobbyists long ago, which saved its operations from being severely curtailed or banned at the start due to backlash from taxi drivers, among other operational factors and controversies.
Uber’s Value Proposition
Uber offers different value propositions for its partners. Here are some for the customers:
1. Ease and Convenience
Uber allows clients easier access to transportation services. They get to choose the types of cars they want and enjoy faster pick-ups, cashless transactions, and their desired level of comfort
2. Safety
For easier tracking, Uber allows clients to share their trip details with friends and families. It also has a real-time tracking feature as the ride progresses, an emergency button, and reporting function. The car’s plate number, driver’s name, and photo are visible at the beginning.
3. Rating System
Riders can rate drivers as part of the company’s commitment to obtaining customer feedback. Drivers with higher ratings are usually more professional. Uber also acts and follows up on these ratings.
4. Affordability
One of the reasons online cab-hailing services have grown in popularity is because of their affordable prices. Uber’s prices are relatively lower than taxi prices, except during surges. Riders also get an estimate before the ride begins.
5. On-demand service
Uber offers reliable rides, saving people from the need to plan trips. You can easily access a driver at the touch of a button
6. Custom-ride
Uber offers several mobility options, allowing drivers to choose rides that meet their needs. For example, those who prefer luxury rides have the Uber Black option.
Here are some of Uber’s value propositions for drivers:
7. Income generation
Uber connects drivers to riders, allowing the former to make money. It offers low idle times as compared to traditional taxis
8. Flexibility
Uber allows self-determined shift durations. Depending on their preference, drivers can also choose whether to work during the day or at night.
10. Real-time tracking of earnings
Uber allows drivers to generate and track their earnings. Such earnings also get paid out frequently in certain jurisdictions
11. Driver’s app
Uber has driver and customer applications. The driver’s app has features such as earnings, alerts, navigation, and planning, which the driver needs to know.
Other value propositions to drivers include zero upfront investment when joining the network, ease of joining, the ability to earn above average, a rewards program, and insurance.
How Does Uber Make Its Money?
What keeps Uber afloat? As a transport and logistics company, Uber has various services, some of which have been acquired by some companies over the years. Its services can be divided into three segments, i.e.,
- Mobility– This consists of the Uber rides-hailing business, known as Rides not long ago
- Freight, which is its full truckload and less-than-truckload shipment business.
- Delivery- Popularly known as Eats, this service focuses on food, small items, and grocery delivery.
Here is an in-depth look at these segments:
Mobility
Under mobility, Uber offers services such as Uber for Business (U4B), transit and vehicle solutions, and financial partnerships. It was the most affected segment during the Covid 19 pandemic, as physical transportation was heavily affected. Here’s a look at Uber’s mobility businesses:
Uber Rental
Uber allows customers to rent cars for as long as they need, usually 1-12 hours. They can add and remove the required stops, dedicating the car to their personal use at an affordable price.
- Uber Green
Uber announced its plans to be an emission-free platform in January 2020, and with it launched Uber Green, a product line that uses electric and hybrid vehicles. However, this service comes at an additional cost that is transferred to users.
- Uber Pool
Uber allows customers to save money by sharing a ride with others. The Uber Pool service launched in August 2014 in San Francisco Bay Area, allowing drivers to pick up other riders in the same direction as the ride progresses. As a result, prices are usually considerably low.
- Uber X
Uber X was launched in July 2012 and still remains one of the company’s greatest successes. It allowed Uber to diversify its primary business model of offering a black luxury car service by introducing cheaper non-luxury cars for the average traveler. It also expanded Uber’s operations by inviting drivers to bring in their cars and transport clients once they passed insurance, vehicle registration, and background and standards checks. The service was present in 35 cities in less than a year.
- Uber Black/ Uber XL/ Uber Comfort
Uber retained its original business model, Uber Black, a premium service that only offers luxurious cars. Clients enjoy expensive rides and exceptional customer service from highly-rated drivers.
UberXL, as the name suggests, offers SUV-sizes cars, which are bigger than Uber X cars. These vehicles can accommodate 6-8 passengers and are usually relatively expensive.
Uber also offers Uber comfort for those needing newer vehicles with more legroom.
- UberGo
Like Uber Pool, UberGo is an economical transportation service line offered by Uber. It uses smaller, fuel-efficient vehicles which are priced fairly. Such vehicles have a limited carrying capacity.
- Uber WAV
Uber WAV, fully known as Uber Wheelchair Accessible Vehicles, is a service that allows those with foldable wheelchairs to use the options available in the Uber application. It was a brilliant invention aimed at promoting inclusivity, one of the most important Uber values.
- Uber Transit
Uber Transit shows Uber’s intent to make transportation as accessible as possible. This service portrays Uber as a one-stop traveling solution and allows users to enjoy optimized traveling options. Through the Uber mobile app, clients living around the same place can enjoy almost door-to-door public transportation service using a small transit vehicle.
Uber also offers motorcycle transportation services, which are known by different names depending on the jurisdiction. For example, it’s called Uber Moto in India and Uber Boda in Nairobi, Kenya.
Delivery
Uber offers a delivery service through its revered Uber Eats platform, which brought in 3.9B dollars in 2020: a 55% growth increase from the previous year due to the Covid-19 pandemic. Users can find their preferred local restaurants, order meals, and physically pick up their orders or pay a delivery fee for doorstep delivery. This platform also allows drivers to make more money during non-peak hours.
Uber introduced bicycles for short deliveries as part of its commitment to achieving emission-free operations. Non-mobility drivers and those whose vehicles aren’t qualified for the platform can register for this service.
Freight
Despite the high fragmentation in the freight industry, Uber also makes money by providing freight services. It stepped in to solve some of the problems faced by shippers, who had to spend days locating the right trucking company or drivers to ship their products while handling all communication over the phone. Carriers would also struggle to find good shippers and negotiate prices.
Uber offered a centralized platform for carriers and shippers, allowing carriers to access transparent pricing and move their goods with the touch of a button. This segment brought in a revenue of $1.82B in the first quarter of 2022.
Other Streams
Uber also made money through its Advanced Technology Group (ATD) entity, which it later sold to Aurora. It was a research and development venture that created autonomous vehicles and ride-sharing technologies.
Uber’s Former Ventures
Uber’s business model has been premised on innovation, which can be seen from some of its former offerings, such as:
1. Self-driving cars
Uber Advanced Technology group, which was co-owned by Denso, Toyota, and SoftBank Vision Fund, was responsible for developing self-driving cars. The company launched this service in Pittsburg on September 14, 2006, through Ford fusion cars before it was later moved to Arizona. However, this venture faced many problems, and the tech group was sold to Aurora Innovation in January 2021 for 4 billion dollars. Uber also acquired a 26% ownership stake in Aurora by pumping in a $400M investment.
2. Air Services
Uber unveiled an exciting 8-minute helicopter flight service in partnership with HeliFlight in October 2019. It cost $200-$225 per passenger to travel between Manhattan and John F. Kennedy International Airport. However, the company decided to sell its Elevate division in December 2020 to Joby Aviation, and with it went this service.
3. Uber Works
Uber Works, a service unrolled in October 2019, was unveiled to allow workers to take up temporary jobs with Uber. It was shut down in May 2020 after being available in only two places, i.e., Chicago and Miami
4. Uber AI
Uber AI was an innovative division created in December 2016 for AI technologies and machine learning research. It is responsible for several open-source projects such as Ludwig, Plato, and Pyro. However, it was closed in May 2020 owing to the heavy losses Uber faced due to the Covid-19 pandemic.
Uber’s Main Competitors
Lyft
Lyft was launched in 2012 and operates in the US, Canada, Puerto Rico, and over 600 cities worldwide. This ride-sharing transportation offers competitive prices and similar services to Uber, such as tracking and maps.
Bolt
Formerly known as Taxify, Bolt also enjoys a large market share. This European cab-hailing and ride-sharing company was launched in 2013 and has since expanded its market to over 30 countries worldwide. It is relatively cheaper than Uber and pays better commissions to drivers as opposed to most competitors
Ola
Ola is one of the biggest cab-hailing services in India. It offers services similar to Uber, such as food and grocery delivery, fleet management, and financial services. It has more than 1.5 million drivers and is present in more than 250 countries worldwide.
Other competitors include driver, Careem, and Cabify.
Uber’s Strengths And Weaknesses
Uber has been in the game for quite some time and is, therefore, a well-recognized company. Some of its strengths include the following:
- It enjoys an unlimited fleet of vehicles as it’s not subject to regular taxi obligations
- It enjoys a high valuation and hence attracts more investors
- It enjoys no responsibility towards its drivers as the company does not fully hire them
- Has a dual rating system for trust and safety
- Relies on customer-to-driver interaction, which keeps the operational cost low
Here are some weaknesses:
- The relationship between the network and its drivers breeds low loyalty as there lacks any real connection.
- Privacy concerns- Uber controls pertinent client data, i.e., customer destination
- Customers may lack the incentive to stay loyal to Uber, given that there is no bonding.
- Increasing competition from existing companies and start-ups given that its business idea can be easily imitated.
Uber’s Future
Uber has faced several challenges over the years, including huge losses occasioned by the COVID-19 pandemic, which forced it to shut down its AI division. Even though business picked up after the pandemic, it should still expect bigger challenges occasioned by the increasing rush to produce self-driving cars and the entry of cheaper and more environmentally-friendly services into the market. The company may therefore have to venture into the fore-mentioned businesses.
Conclusion
Uber has had its fair share of successes and losses over the years. It enjoys partnerships with several international businesses and has created jobs for drivers worldwide. Despite the challenges, it is clear that Uber embraces innovation and is here to stay.
