Ride-hailing service Uber Technologies Inc. is growing rapidly in sub-Saharan Africa and considering moves into more markets, despite sometimes violent opposition from metered taxi drivers, a senior executive said on Tuesday.
Uber's service has triggered protests by rivals from London to New Delhi as it up-ends traditional business models that require professional drivers to pay steep licensing fees to do business.
"We are bullish on Africa. The growth here is still substantial and we think that given the right regulatory environment, the growth could be even better," Justin Spratt, head of business development for the sub-Saharan region, told Reuters.
"Africa's growth thus far has been faster than America and a large part of that is because there is such deficiency in public transport ... that talks to the latent need, the pent-up demand for citizens to travel more within cities," he added.
Spratt said Uber was talking to governments, regulatory authorities and metered taxi associations across the continent to address grievances that have seen some of its contract drivers attacked from Kenya to South Africa.
"We realize that we need to work with cities and the regulatory framework to help build out ride-sharing regulation," he said on the sidelines of an African telecommunications conference.
Uber, which operates in Nigeria, Kenya, Ghana, Tanzania, Uganda and South Africa, has around 15 million drivers globally and is struggling to meet demand in Africa for drivers to become contractors, Spratt said.
The service, which launched in sub-Saharan Africa in 2013, is looking to new markets in Senegal, Ivory Coast, Mauritius and the wider southern African region, but has not yet taken a decision on where it will go next, he said.
Uber has announced the appointment of Lola Kassim as its new General Manager for West Africa.
Lola worked as a Management Consultant with McKinsey and Company where she led teams providing strategic business advice and implementing organizational and operational improvements in the energy, public, and financial services sectors in West and Southern Africa.
A seasoned professional with over 10 years of global experience working at senior private sector and government levels in Africa and Canada, Lola will be responsible for driving Uber’s overall strategy for West Africa, which includes improving reliability and service levels for uberX and creating additional value adds for driver-partners.
“I am immensely pleased to be joining Uber at a pivotal point in the company’s growth and expansion curve. My vision for West Africa, in particular, is to ensure that we are aligned with Uber’s overall objective of creating sustainable, alternative modes of mobility. In addition to creating value for driver-partners and riders, I will also be focused on ensuring that we continue to engage with our key stakeholders and relevant partners with a view to continued positive impact across West Africa.”
Speaking on Lola’s appointment, Alon Lits, General Manager Sub-Saharan Africa, Uber said: “As a company that is deeply committed to diversity and inclusiveness, we are excited to have Lola join the team of other incredible women at Uber – who are pushing the envelope towards achieving the global vision of creating value for riders and driver-partners alike. In West Africa, Lola will be supported by a highly skilled and enthusiastic team covering Operations, Marketing, Communications, Legal and Policy. As we often say at Uber, we are #superpumped.”
Prior to joining Uber, Lola spent 3.5 years as a Management Consultant at McKinsey and Company. She also worked as a Governance Advisor with the Liberian Presidency through the
Africa Governance Initiative, supporting a unit driving delivery of Presidential infrastructure priorities. She began her career with the Canadian government where she served as Policy Advisor to senior officials and managed units developing policy, strategy, and business cases regarding socio-economic development programming for Canada’s Aboriginal communities and foreign policy.
A Nigerian-Canadian, Lola holds a Bachelor’s degree from Harvard University and an MSc from the London School of Economics where she was a Chevening Scholar.
Every day there’s more news about the inevitable arrival of autonomous vehicles. At the same time, more people are using ride-hailing and ride-sharing apps, and the percentage of teens getting their driver’s license continues to decline.
Given these technologies and social changes, it’s worth asking: Should Americans stop owning cars?
We’ve conducted an analysis of the all-in cost of car ownership, and we found that mobility services such as ride-hailing and ride-sharing apps – which few people today would consider their main mode of transportation – will likely provide a compelling economic option for a significant portion of Americans. In fact, if the full cost of ownership is accounted for, we found that potentially one-quarter of the entire U.S. driving population might be better off using ride services versus owning a car.
From dream to brutal reality
America’s love affair with the car and individual car ownership took off after World War II, aided by inexpensive fuel, a rising consumer class and a vast national network of highways. A new generation of young professionals moved away from the urban core to the suburbs and abandoned mass transit for transportation enabled by personal car ownership.
This shift transformed the modern American landscape, triggered a new approach to city planning and enabled urban sprawl. Cities that blossomed before WWII – New York and Boston, for example – already had and continue to use their mass transit systems. By contrast, cities whose growth mostly occurred in a post-war boom like Los Angeles, Atlanta, Houston and Denver were built and effectively designed around car ownership. It’s still typical for an American family to buy a house that has a large garage to store cars.
But for many people, the 1950s concept of driving as an expression of personal liberty has been replaced by the brutal reality that driving is often a tedious chore. With an average price of US$35,000 apiece in the U.S., cars are used about 4 percent of the time, during which drivers are often subjected to congested traffic.
On its face, spending so much money for an appliance that starts losing value immediately, takes up vast amount of our free time and is rarely used seems ridiculous. Is it time to consider a whole new approach to personal transportation?
To answer this question, we built a comprehensive calculator that includes the costs of car ownership and compares it with an alternative of using mobility services, such as ride-hailing and ride-sharing apps, full-time to replace personal car ownership. The results might surprise you.
The costs of traditional car ownership go far beyond the price tag: There is also interest paid on car loans, insurance, taxes, fuel and maintenance. Some expenses are non-obvious, such as parking, property taxes and construction costs for home garages, and the value of our time.
The value of an individual’s time – that is, the dollars per hour you would assign to the time you spend driving – is one of the most important factors in our calculations.
The average American spends 335 hours annually behind the wheel driving over 13,000 miles. Add in the hours we spend maintaining, cleaning and managing our cars, and it becomes clear that America’s focus on personal car ownership is costing us a significant amount of time, arguably our most precious asset.
How much would you pay to avoid the stress of driving around town? How much would you pay to use that time more efficiently, such as catching up on email, reading a book or taking a nap? What if you could do work-related tasks while riding? Some professions are more suited to using time riding in a productive way: It’s probably easier for a lawyer to clock billable hours while riding to work than a plumber, for example.
When these costs are included, mobility services might be the economically preferable option. To be clear, this analysis is focused on full replacement of personal car ownership in which an individual would shift to using ride services for all trips, rather than purchase a new vehicle.
The decision for owning a vehicle or using mobility services is unique to every individual. If you purchase a highly efficient vehicle for less than $25,000 and drive it more than 15,000 miles per year until it falls apart, then you should definitely own a car if your goal is to save money.
But, if you drive less than 10,000 miles per year, face long waits in traffic, or place a high value on your time that would otherwise be spent driving, our calculations show that mobility services might be the cheaper option. Geography can also play a role – it’s not a coincidence that there have historically been so many taxi cabs in New York City, where the high cost of parking and slow pace of traffic consume time and money.
Outpricing human drivers
The rise of autonomous vehicles used for carpooling and ride-sharing services could make mobility services even more compelling, particularly when you consider the economics from the service provider’s perspective.
Assume for a moment that you operate a fleet of vehicles that provide mobility services. Let’s also assume you can purchase the vehicles in bulk for $20,000 apiece and that they will operate full-time for five years (the average age of a New York City taxi was 3.6 years in 2015). The median annual pay for a taxi driver is approximately $25,000. This means that it will cost you $145,000 to purchase the car and pay a driver over five years of operations (ignoring fuel, maintenance, registration and other miscellaneous operating expenses).
Using common accounting practices, we calculated that if you could buy an autonomous vehicle for less than $114,000, a service provider would be better off never hiring a driver.
For the average customer, a price tag of $114,000 is unimaginably high for a car. But, for a company like Uber that might someday operate a fleet of autonomous vehicles, a price tag north of $100,000 might look like gold when compared with paying drivers, a major contributor to operating cost.
As the price for autonomous vehicles goes down, the cost of delivering ride services goes lower. That means more consumers are more likely to use them, expanding the overall market.
Uber, Alphabet and many of the automotive companies understand this. It’s one of many reasons why there is an epic race to capture market share and eventually be the first to deliver fully autonomous vehicles.
On the other hand, if the price of autonomous vehicles falls far enough, maybe individuals will buy their own and recapture the time they currently spend driving themselves, obviating some of the value of mobility services.
But, another question remains: Do Americans really want to give up their cars? Even if mobility services with carpooling and automation are a less expensive choice, the service might still not be adopted quickly since people purchase cars for many reasons beyond simply price (for example, they buy cars for convenience, status, fun, identity and so forth).
For many decades, the car has been a critical part of the American culture, often used as a tool to flaunt wealth and showcase the unique personalities of the drivers. Will Americans want to ride in cookie-cutter cars that are part of a larger automated fleet? Will they trade off the idea of car ownership as an extension of identity to gain back some of their free time?
Some trends do appear to be working in favor of increased use of mobility services. As the United States, and the world more broadly, continues to adopt ever greater levels of digital communication, more people will be able to complete work while on the go. And, the movement toward cities during the past decades has resulted in denser urban centers, increasing traffic congestion and making the case for alternatives to traditional car ownership.
Even changes in how different generations consume goods and services might be playing a role. Millennials have shown tepid interest in following in the footsteps of prior generations when it comes to car ownership. It will be interesting to observe whether Generation Y shows more desire for cars as they begin to enter parenthood and push toward suburbs in pursuit of affordable housing.
How the transition will play out is still unclear. If we were to postulate, it seems the most likely outcome is that the future transportation system will be a mix of personal car ownership and mobility services, using both systems as complementary. If more people use carpooling services in particular, these complementary systems of personal car ownership, mobility services and public transportation might make our roads and cities cleaner, faster and more affordable.
In addition to common mobility services today, Uber and Lyft might soon be joined in force by microtransit operators, like Ford’s Chariot shuttle service.
As mobility services become more mature, we will likely see new solutions emerge to make it even more convenient to meet specific needs, such as transporting youths, the elderly or disabled people, and even assist in disaster recovery efforts. The increased level of service could create a virtuous cycle that reinforces the value of mobility services, producing greater adoption, which further lowers costs and leads to even greater adoption. When it’s all said and done, the ease and economic benefits mean that the transition to mobility services might take place faster than we think.
Researcher Zhenhong Lin, Ph.D., from the Oak Ridge National Laboratory contributed to the research in this article. Gordon Tsai of the University of Texas also contributed.
F. Todd Davidson, Research Associate, Energy Institute, University of Texas at Austin and Michael E. Webber, Professor of Mechanical Engineering and Deputy Director of the Energy Institute, University of Texas at Austin
Following TfL’s decision to withdraw Uber’s license to operate in London, there has been a widespread picking over of the ride-hailing app’s recent history – and speculation about its future. A fairly common conclusion is that Uber needs to become more ethical if it is to survive.
I want to suggest that this may not be possible. After the calamitous year Uber has had, it should not be difficult for the company to improve its reputation – simply by avoiding many of the unnecessary embarrassments heaped upon itself in 2017. However, merely improving its PR will not get Uber out of the hole it has now dug for itself. It is looking as though, in many territories such as London, Uber’s survival will rely on concrete measures to better care for both its drivers and customers.
Herein lies the problem. It is not that Uber is incapable of such ethical measures. But for this company specifically, the additional cost that is required to look after drivers and customers is likely to be too great. It all comes down to the economic model on which Uber is built.
There is a great tendency among commentators to focus on the capabilities of Uber’s app, when making sense of its explosive growth across the world. This is a mistake. Figuring that Uber’s app explains its growth is like putting the birthday cake’s appeal down to the candle on top. The engine of Uber’s growth to date has been the US$11.5 billion it has raised from banks and investors. The company has never made a profit, and in 2016 alone lost nearly US$3 billion.
These are staggering amounts, and to make sense of them we need to understand that Uber’s business model is the same as Amazon’s. Amazon became the largest online retailer on the planet by burning through huge sums of investment on the way to becoming dominant in an ever-increasing number of sectors, and a de facto monopoly in some such as books.
Now Amazon is able to use its position to generate the vast profits expected by those that funded its expansion. Effectively, what both companies surely rely on is investors subsidising the prices customers pay in the short term, in return for a long-term monopoly with higher prices.
In reaching this point, Amazon has itself received plenty of criticism, particularly around its tax arrangements and working conditions in its Orwellian “fulfilment centres” (warehouse to you and me). But Amazon has benefited, throughout its growth, from a trump card: its use of a virtual shopfront makes its overheads significantly lower than bricks-and-mortar rivals.
Uber’s fundamental problem is that it does not have this advantage. In his comprehensive critique of Uber, transport expert Hubert Horan made a key observation about the taxi business, which separates it from retail. While shops have used economies of scale to operate first nationally, then internationally, for over a century, taxi companies have remained highly localised. The reason for this, argued Horan, is that the economies of scale are not there for the taking in this market. Some 85% of taxi company costs are drivers, cars and fuel, and this applies whether you cover one city or a dozen.
Not only does Uber not avoid these costs, its model actually introduces new ones. Most dramatically, the costs of becoming established in new markets is vast. This, particularly the artificial subsidising of passenger fees/driver wages to drive growth, is the source of the US$3 billion net loss last year. Ultimately – whether in the form of debt or equity – these sums will have to be paid back, and then some.
Eventually, this additional cost will be felt. Either the driver has to bear it, and so is motivated to look to rival employers, or the customer does, with the same outcome. Uber’s hope must be that when it gets to this stage there will be no alternatives left to chose from.
So can Uber afford to become ethical? Its growth to date has been so costly that even after the raft of regulations it has managed to sidestep, and measures forcing down the income of its drivers, it is losing billions every year. In a properly regulated market, in which Uber has to give its drivers appropriate employment protections, and passengers the safeguards they need, its goal of apparently aping Amazon becomes even harder.
If Uber can achieve market dominance before it runs out of funding, the inefficiencies in its model cease to matter. Society will simply have to carry the cost of higher fares and lower driver wages.
If it fails to achieve near monopoly status and has to continue to compete against local firms, in my view it has little hope of ever repaying its investors. For customers that travel to different cities frequently, Uber’s scale gives them a clear edge. For everyone else, is an app slightly shinier than its competitors’ clones enough to outweigh the higher fares that should come with Uber’s model?
Should Uber ultimately fail, it would open up the possibility of a taxi company fit for the 21st century. One that harnesses the possibilities of digital technologies not to enrich venture capital, but drivers themselves, in the form of cooperatives like the one currently developing in the absence of Uber in Austin, Texas.
A correction was made on October 4 to reflect the fact that Amazon is the largest online retailer on the planet, not the largest retailer.
Uber Technologies Inc's new Chief Executive Dara Khosrowshahi told employees on Wednesday the ride-services company would change its culture and may go public in 18 to 36 months.
Khosrowshahi, who led travel-booking site Expedia Inc for 12 years, made the remarks as he introduced himself to Uber's workforce on Wednesday during an all-staff meeting at its San Francisco headquarters.
His plans include rebuilding Uber's culture and growing market share as well as possibly conducting an initial public offering in 18 to 36 months, according to people who attended the meeting. It is common for venture capital-backed companies to signal an IPO at a vague time in the future.
"This company has to change," Khosrowshahi told employees, according to the Twitter feed of Uber's communications team. "What got us here is not what's going to get us to the next level."
Khosrowshahi said Uber needed to stabilize itself but also take what he called "big shots." The appointment of Khosrowshahi, who described himself as "a fighter," comes as Uber is trying to recover from a series of crises that culminated in the ouster of former CEO Travis Kalanick in June. It is also a key step toward filling a gaping hole in its top management that at the moment has no chief financial officer, head of engineering or general counsel.
In his first meeting with Uber employees, Khosrowshahi emphasized recruiting new talent - particularly a chief financial officer - as well as a chairman to help him run the board, according to tweets from Uber.
Kalanick, who attended Wednesday's staff meeting, welcomed his replacement in a statement. "Casting a vote for the next chief executive of Uber was a big moment for me and I couldn't be happier to pass the torch to such an inspiring leader," Kalanick said.
Khosrowshahi inherits a dysfunctional board that has been divided by a lawsuit filed by investor Benchmark Capital against Kalanick. The lawsuit, which seeks to force Kalanick off the board and rescind his ability to fill two board seats, has caused shareholder infighting and complicated the CEO search.
Delaware Judge Sam Glasscock on Wednesday brought that dispute closer to a resolution when he stayed the lawsuit and moved it to arbitration, which moves the legal fight out of the public eye and hands a victory to Kalanick.
"I think what we have here is a political battle that belongs in the boardroom and not the courtroom," said Donald Wolfe, an attorney for Kalanick. Glasscock stopped short of dismissing the lawsuit, as Kalanick had requested, because of concerns about the impact the dispute might have on other Uber shareholders who may also want to take legal action. The board had already selected Khosrowshahi as Uber's next CEO in a vote on Sunday. But the firm and its board did not speak publicly on the decision until Tuesday evening, as contract negotiations were ongoing.
"The board and the executive leadership team are confident that Dara is the best person to lead Uber into the future," Uber's eight-member board wrote in an email to employees sent late Tuesday that was also made public.
Khosrowshahi has been replaced at Expedia by Mark Okerstrom, the company's chief financial officer for the last six years. On a call with reporters Wednesday, Okerstrom hinted at the surprise and confusion that followed Khosrowshahi's appointment as Uber CEO. Khosrowshahi was not a publicly known candidate for the job, and he told Expedia staff he was accepting the new role two days after the first media reports on his selection.
"I think the way that this whole thing unfolded is not the way that most people would have planned it," Okerstrom said.
Khosrowshahi will remain on the Expedia board.
A battle among shareholders over Uber Technologies Inc escalated on Thursday as some investors sought to fight a lawsuit by shareholder Benchmark Capital against ousted Chief Executive Travis Kalanick.
In a letter to the Uber board of directors seen by Reuters, Shervin Pishevar, a venture capitalist with Sherpa Capital who is an Uber investor and critic of Benchmark, said he was seeking to intervene in the lawsuit filed Aug. 10.
He said Benchmark's effort to remove Kalanick from Uber's board was aimed at gaining control of the company. "If Benchmark insists on trying to use the courts to try to take over this company, we are committed to doing everything we can to try to stop this abuse," Pishevar wrote in the letter sent Thursday.
The conflict playing out in public marks a rare turn of events for Silicon Valley. It is extremely unusual for a venture firm to sue the central figure of company it has backed and equally unexpected for fellow investors to make a highly public counter-move. The legal dispute started two weeks ago when Benchmark sued Kalanick in Delaware's Chancery Court to force him off Uber's board and rescind his ability to fill three board seats.
Benchmark owns 13 percent of Uber and controls 20 percent of the voting power. After an initial investment of $12 million, its stake in Uber is now worth almost $9 billion. Kalanick holds about 10 percent of Uber stock and about 16 percent of its voting power.
Kalanick has called Benchmark's lawsuit "a public and personal attack" without merit and called for the dispute to be moved to arbitration, according to court filings. Pishevar and fellow Uber investor Stephen Russell have come to Kalanick's defense. In their motion to intervene in the lawsuit, Pishevar and Russell blasted Benchmark's "dirty tactics" and "public smear campaign" against Kalanick. In the document, they called Benchmark's lawsuit a "transparent" effort "to unscrupulously gain control of Uber's board of directors."
The motion was filed by Russell and Sofreh LP, Pishevar's partnership. A copy of motion was provided to Reuters by a source close to the matter. A judge must rule on the investors' request to intervene in the lawsuit.
Benchmark's lawsuit accuses Kalanick of fraud in concealing misdeeds from the board when last year he requested the board add three seats that he would have the sole right to appoint. Board members, including Benchmark, approved. The lawsuit says the firm never would have approved the request had it known about the misconduct, including details of an alleged theft of trade secrets that has led to a high-stakes legal fight with Alphabet Inc's self-driving car unit, Waymo.
The legal battle could determine who wields power at Uber as the world's largest venture-backed company looks for a new CEO to help it overcome a year of scandals, rebuild its tarnished image and turn it into a profitable business.
Kalanick was forced to resign as CEO in June, when shareholders representing about 40 percent of the company's voting power signed a letter asking him to step down, following a succession of scandals at the company ranging from sexual harassment to using software to evade regulators in certain cities. Kalanick remains on the board and is involved in the company's search for a new CEO.
Pishevar has in two previous letters called on Benchmark to step down from the board and sell the majority of its Uber stake. Benchmark, an early Uber investor, has a seat on the company's board, and Pishevar's firm does not.
BENCHMARK SAYS KALANICK IS 'CORROSIVE'
Benchmark doubled down on its allegations against Kalanick on Thursday with a new court filing that accused Kalanick of having a "corrosive influence" on the ride-services company and arguing that a Delaware court should decide Kalanick's future on the Uber board, not arbitrators.
Removing Kalanick from the board is necessary "to ensure Uber is protected from Mr. Kalanick's corrosive influence and can promptly obtain the new leadership it needs to move forward," Benchmark's court filing said, referring to Uber's search for a new CEO.
A spokesman for Kalanick said Benchmark's latest court filing relies on meritless personal attacks against Kalanick with no legal basis.
The ousted chief executive of Uber Technologies Inc [UBER.UL] rejected a lawsuit filed against him by one of the company's top investors as a "public and personal attack" without merit, according to court documents filed late on Thursday.
Venture capital firm Benchmark Capital, which says it owns 13 percent of Uber and controls 20 percent of the voting power, last week sued former Uber CEO Travis Kalanick to force him off the board, where he still has a seat, and rescind his remaining power there.
Kalanick, in the first court filing in response to the lawsuit, said Benchmark's legal action is part of a larger scheme to oust him from the company he helped found and take away power that is rightfully his. He also argued that the legal quarrel should take place in arbitration and that Delaware's Chancery Court, where the lawsuit was filed, lacks jurisdiction.
Benchmark's lawsuit marks a rare instance of a well-regarded Silicon Valley investor suing the central figure at one of its own, highly successful startups. The case has stunned the venture capital community and created a divided Uber board and infighting among shareholders, many of whom have criticized Benchmark for suing.
At issue is a change to the board structure in 2016 that expanded the number of voting directors by three, with Kalanick having the sole right to fill those seats.
In its lawsuit, Benchmark said Kalanick hid from the board a number of misdeeds, including allegations of trade-secret theft involving autonomous car technology and misconduct by Kalanick and other executives in handling a rape committed by an Uber driver in India, when he asked Uber's board to give him those extra seats.
Benchmark said it was "fraudulently induced" to agree to the change and wants Kalanick to give up control of those seats.
But Kalanick's court filing said that at the time of the board change, "Benchmark was fully aware of all of the allegations involving Kalanick." The venture firm made no mention of fraud and continued to publicly support Kalanick through May, according to the filing.
Then in June, Benchmark was part of a group of five investors who demanded Kalanick's resignation as Uber's CEO. "The Benchmark principals also handed Kalanick a draft resignation letter, and told him he had hours to sign it, or else Benchmark would start a public campaign against him," according to the court document.
Benchmark first backed Uber in 2011 with an investment of $12 million. At the $68 billion valuation that Uber achieved last year, Benchmark's stake would be worth almost $9 billion. "Resorting to litigation was an extremely difficult step for Benchmark," Benchmark said in a statement through a spokeswoman. "Failing to act now would mean endorsing behaviour that is utterly unacceptable in any company, let alone a company of Uber's size and importance."
The lawsuit comes amid discussions by outside investors, including SoftBank Group Corp, to buy a large chunk of Uber stock, although it is unclear if any transaction will occur. Benchmark's public effort against Kalanick is largely solitary, with the remaining six members of Uber's board of directors last week issuing a statement expressing their "disappointment" in the lawsuit. Uber investor Shervin Pishevar of Sherpa Capital, joined by other shareholders, sent letters to Benchmark calling for the firm to divest its shares and step down from the board.
In an unusual move, Benchmark this week wrote an open letter to Uber employees, saying Kalanick had undermined the CEO search and was seeking to "create a power vacuum in which Travis could return."
As the ride-hailing company Uber lurched from one clumsy mess to the next, it had appeared that CEO Travis Kalanick would somehow ride out the storm. His recent resignation is an admission that the company needs to explore new avenues.
I wrote recently about tech CEOs who had protected themselves from the usual pressure from shareholders, and were able to freely dictate strategy and culture. I’m happy to say that Kalanick’s departure from the top job (he will stay on the board) signals that there is indeed a line to cross where even disenfranchised investors can assert their power. It is not hard to see why: Uber is facing up to some tough decisions.
Aside from the rows around a damaging corporate culture, news that rival Lyft has increased its share of the US ride hailing market from 17% to 23% is rapidly destroying investor assumptions about this industry. Uber investors have stumped up US$12 billion in the belief that this is a winner-takes-all market. That now looks not to be the case.
This is great news for the customer as low fares are likely to persist. Uber investors had been funding incentives to both customers and drivers in the hope that both would stay put once the incentives stopped. Evidence is beginning to suggest otherwise. Uber’s 2016 losses, largely driven by the funding of incentives globally and from the development of driverless car technology, were US$2.8 billion.
So where did that winner-takes-all belief come from? Well, investors had looked at Amazon, Facebook and Google. The first mover in those cases developed a large customer base attracted by an increasing number of suppliers. In turn, suppliers found access to large numbers of customers and had no motivation to go elsewhere. The software simply does the matching.
An Uber customer wants a quick pick-up and cheap fares while the drivers want to be busy generating higher wages. So, in theory, an app which offered both at a high level, and was first to market, should attract most of the drivers and customers.
However, the app is readily copied. Many taxi firms now have their own app with similar attributes. Customers may now have several ride hailing apps on their phones which they can check for the cheapest and most rapid arrival.
Additionally, drivers are self-employed and can switch their allegiances rapidly. This is not a recipe for world domination.
Existing firms leap at the opportunity to expand. Lyft has proved that to be so by gaining US market share just as Uber’s reputation was soured by allegations of a sexist and macho culture. A major lawsuit from Google has only added to the sense of a company struggling to maintain its grip.
Uber can learn from Lyft, which has succeeded with a clear market focus, unhindered by unrelated diversification. Lyft has focused on ride hailing in the US alone. Uber has expanded globally and invested heavily in driverless car technology. Uber spent $2 billion in a Chinese market it has now exited under pressure from the local competitor Didi Chuxing.
In the Indian market, which is led by Ola, Uber was slow to adapt to very different market conditions and lost time and position. Even in the UK, Uber has faced competitive and political pressure from established taxi operators. Focus means being able to channel resources, knowhow and competitive strategy into one area. Uber has left itself open to attack on too many fronts.
That brings us to Kalanick’s odd move into driverless car technology, taking on the might (and vast resources) of Google. Many of the world’s major car companies, with their own attendant resources and technology partners, are also investing heavily. Was Uber really going to win a fight against Ford, Mercedes, GM, and Tesla?
It is likely they are all further ahead than Uber. Indeed it is difficult to see what technology Uber has to offer in this particular market. Surely this is a prime opportunity for a deal where Uber supplies the demand while the more advanced partner supplies the technology and cars.
Kalanick’s ambition has been fundamental to the rise of Uber. With his departure from the CEO role, perhaps that ambition will give way to strategic sense. Kalanick was able to cling on for so long partly thanks to investors’ desire to unearth the next tech giant, which made them indulgent of the founder’s control. The hope must be that the Uber experience encourages investors to tighten the reins on tech executives. The job for the next CEO will be to convince investors and customers that it is worth sticking around to see how this all ends.