The technologically accomplished transportation network company has made its way to the top thanks to unique operating and marketing strategies.
The real world and the material world are both getting busier by the day. It is of no surprise today that the traffic on roads and the traffic on smartphones are equally swelling. Uber, the American International transportation network company seems to have grasped this concept with much ease. The result has been their extremely simple yet efficient business model which runs completely on a mobile application. Having come a long way since being founded in 2009, Uber, just like its name, has exemplified transportation services. Read through their journey, and you will definitely think twice before taking a cab next time.
What is Uber?
Uber is a transportation referral service company. This effectively means that Uber connects prospective passengers with drivers, helping both the passenger in reaching their destination and the driver in finding work. This is accomplished by making use of a mobile based application also called Uber which enables users to apply for a trip request. This request is in turn forwarded to drivers in the vicinity. Uber thus acts as an intermediary or an agent between the two parties. However, one would not be wrong in thinking of Uber being synonymous with taxis. After all, the exact same purpose of a taxi is being served here.
Clearing out the question of what Uber is, let us now take a look at how it came about to be.
Founding and Funding
Uber was co-founded as UberCab in the year 2009 by Travis Kalanick, for whom it was his third business venture, and Garrett Camp, who is also the owner and founder of the personalized search engine StumbleUpon. Kalanick is also currently the CEO of the company. The service became effective from June 2010 and was launched in San Francisco, with the application being made available on Apple and Android phones.
Coming to the initial venture funding, Uber boasts of a good range of investors including those from Silicon Valley. In addition to former Google Executive Chris Sacca and Amazon CEO Jeff Bezos, Uber raised funding from Benchmark Capital, Menlo Ventures and Goldman Sachs from late 2010 to late 2011, gathering a total funding of $49.5 million.
Futher in 2013, Uber raised $258 million from Google Ventures and by mid 2014 they had accumulated a venture capital of $1.5 billion. Throughout 2014, the company further raised a further funding of $1.2 billion from sovereign wealth fund, Lone Pine Capital, Valiant Capital Partners, New Enterprise Associates and Qatar Investment Authority.
Baidu, the Chinese web engine also a made a significant investment towards the end of 2014 in Uber along with a commitment to combine features of the search engine with those of the Uber app. With continual fund raising, Uber had finally gathered up to $2.8 billion by the beginning of the year 2015. Having such back up it was only expected of Uber to slowly extend its services to the entire country and soon establish themselves worldwide.
Uber’s Worldwide Expansion
As of today, Uber’s services are accessible across approximately 250 cities in 53 countries. While the services are not allowed everywhere, and rules and regulations vary across cities, states and countries, it is safe to say that Uber runs its services worldwide.
All the way across the Atlantic, Uber began its operations in Paris in December 2011, making it the first city to have Uber services run across it outside of the United States. Not long after, the company made available its services in March 2012 to neighbors Canada. July of the same year saw the app being launched in London, and in November Uber saw its launch in Sydney, Australia for a test period of six weeks.
Having expressed an interest earlier to expand the services of Uber into Asia, Kalanick saw its soft launch in January 2013 in Singapore. Soon after that in August 2013, Uber services were also launched in Seoul, South Korea in a test phase. South Africa was next in line to witness the launch of the company’s services in Johannesburg and Cape Town in September and October 2013. China and India received Uber services in mid 2014. In mid July 2014, Uber held an official launch in Beijing. Four of the largest cities in China have the company’s services operational. On August 29, 2014 Uber was launched in India in Bangalore.
Also in 2014, Denmark had Uber’s services introduced to it and in January 2015, Uber launched its services for the first time in the East African region in Nairobi, Kenya.
This link shows every Uber destination in the world and also the estimated charges of the trip –
With its continuous expansion, Uber developed a policy of having only three employees in every city where it operates who are in charge of the entire operation in the city. While it enjoys its staggering worldwide reach, over time across countries, Uber has been protested by governments and taxi service companies for reasons of safety and legality.
Let’s now take a look at how Uber works and how its vast operations are managed, a task which is certainly humongous.
Uber’s Uber-cool Model- It’s Different
Uber has established itself as an extremely tech savvy company making complete use of smartphones and its mobile application to run its services effectively. As mentioned before, the Uber mobile application connects the customers with the drivers which makes use of GPS. Availabe on Andorid, Windows, and iOS, this is something highly desirable as both the parties are aware of each other’s location, removing all doubts and apprehensions about the time it would take for the cab to reach the customer.
Another highly appealing factor in this regard that has contributed to Uber’s ever increasing popularity is that all the monetary transactions are virtual, completely cashless! The company collects payments through the credit cards of the passengers through their mobile application. After charging the service fees, which is the company’s source of income, the rest of the money is sent to the driver’s account. Thus, everything takes place behind the scenes taking care of another problem for the parties to worry about.
Speaking of payments, the pricing of Uber is not much different from that of metered taxis where a per minute/per mile charge (depending on the speed at which the Uber car travels) is added to a base charge. There may be additional charges for any unfortunate events. Also, Uber makes use of surge pricing on the basis of supply and demand, considerably increasing the rate at times. Although they’ve justified the practice by putting forth the viewpoint that it encourages more drivers to run the service, yet it has frequently been criticized by the passengers.
Also, to cater to the needs of customers with highly variable economic backgrounds, Uber provides its service in different levels with different charges for each level of service. The original service that the company commenced its operations with is Uber Black, a service with professional drivers and high end vehicles. UberX is the option which costs the least and makes use of cars that are run on an everyday basis. The service UberSUV, as its name suggests, makes use of larger cars and charges a premium for the same. The most luxurious service provided by the company is Uber LUX operating in deluxe cars. Uber has also released two new versions of the app – UberPop where passengers are connected with drivers who do not have a professional taxi license, and UberPool which introduces the concept of carpooling whereby two passengers going towards the same destination share a cab.
Another interesting aspect of Uber is its drivers. After all, who drives for Uber? The answer is simple. Anyone can drive for Uber as long as they can clear Department of Motor Vehicles and background checks. In addition to that, they must also possess a car which has to be insured. Each driver is provided with an iPhone to be able to run the Uber application and track the customer’s location. With such little requirements for qualification as an Uber driver, the company tends to attract a large number of people. This has led to a lot of competition and dissatisfaction at times among drivers who end up working hard to earn less than what they aim. At the same time, it should also be noted that the minimum qualifications may vary across countries.
A standout feature of the application is that the users can also be rated. The drivers can rate the passengers which might want to make them twice about making their driver wait. Also, a first time user is provided with a special discount. With such little gestures, Uber has hit the right chords with its users.
Having established itself more as a platform instead of an employment company, it is hardly surprising that Uber has attracted a surge of people taking full advantage of its services. This feature in particular has given it an edge among its competitors, namely Lyft, Sidecar and Haxi. Thus, making use of an excellent mobile application and background technology, a very smooth and user friendly interface, takeover of responsibilities, a variety in levels of service, and the role of a platform for connecting drivers and passengers, Uber has set itself apart and has left little to the imagination as to why it has performed so well.
Disputes and Controversies
By now we are well aware of how successful Uber has been in capturing such a major portion of the market. However, the story of their achievements is not all that clean and crisp as it may seem. What is meant by this is that Uber has not been free from controversies. It has had its fair share of trouble, and by fair share we mean more than just a handful.
To begin with, numerous lawsuits by private entities have been filed against the service company over the years of its operation. December 2013 saw the company being faced with a lawsuit when in an unfortunate incident an Uber driver ran over and killed a six year old girl. A year later, a lawsuit was filed in Philadelphia by 44 taxi companies alleging Uber’s operations in the city as illegal. The company has also faced troubles regarding bans due to licensing issues in cities within the US and also countries such as Spain, Thailand, Germany, the Netherlands and even Canada.
Another lawsuit regarding non provision of services to reportedly more than 30 blind customers was filed against Uber by the state chapter of the National Federation of the Blind in California.
Also, in the beginning of 2015 a lawsuit was filed by a Delhi woman alleging rape charges against Uber driver Shiv Kumar Yadav. Uber services were banned in the city following the incident. However, it was claimed that the ban was a result of a licensing issue. There have been similar cases of sexual assault involving the company in Chicago, Seattle and Washington DC.
Incidences of protests have also been observed against Uber. In January 2014, cab drivers near Charles De Gaulle Airport in Paris attacked the car of an Uber driver fearing competition from the new transportation service company. A similar incident was observed on a larger scale across many European cities where roads were blocked by taxi drivers as a sign of protest against the operations of Uber, which they saw as a threat to their jobs.
Uber has also not been shy of getting its hands dirty when it comes to eliminating competition. Leaked documents in January 2014 proved that the company had deliberately ordered rides from Gett and then canceled them to waste the time of the drivers and to provide them with incentives to instead join Uber. Uber issued an apology regarding the same on its website. A similar claim was made by the major competitors Lyft. This time however, Uber denied any involvement. Uber’s tussle with Lyft continued in August 2014 with the Operation SLOG under which several contractors reportedly were recruited to collect intelligence regarding the launch plans of Lyft and bring their drivers to Uber.
If the list of controversies so far wasn’t enough, Uber has also had issues with journalists. The company was accused in November 2014 of hiring teams to find out private information of journalists who portrayed a negative image of Uber. The claims surfaced after PandoDaily editor Sarah Lacy accused Uber of being sexist and misogynistic. While Uber reassured the public that they would never take such a step, Emil Michael, the senior vice president of the company issued a public apology.
There have also been a few issues of privacy of the users of the service. In 2011 sources disclosed misuse of the information maintained by Uber, granting the staff tracking access to their customers. In February 2015, Uber admitted to have faced a data breach in the past with driver names and license plate information being unwittingly disclosed.
Uber’s public image has taken a hit thanks to the above list of controversies it has been part of and its rivalry with main competitors Lyft. Peter Thiel, a major Lyft investor used the term “ethically challenged” for the company. Better Business Bureau (BBB) gave Uber an “F” rating after complaints regarding unexpectedly high charges!
Uber has also faced legal issues in many countries including Australia, Canada, India, China, France And Germany among others.
Uber’s Current Status and Consistent Growth
Uber may have seen much in its plate while considering altercations and controversies but that has not been enough to hinder its fast paced growth in any way whatsoever. The 2013 USA Today tech company of the year has an influx of investors to thank for the same. Despite facing so many legal issues and disputes, Uber’s valuation has been growing immensely with its current value at more than $41 billion!
The vast innovation behind Uber has given rise to a new trend where many rising companies have started to come up imitating its business model; a trend that world has come to call as “Uberification”.