Uber: A Rough Road Ahead?

Code : MM0077

Year :
2020

Industry :Transport & Logistics

Region : Global

Teaching Note:Available

Structured Assignment :Not Available

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A NOTE ON UBER: Uber , a mobile application that allowed consumers to connect with taxi drivers and book rides to the destination of their choice, was founded in 2009 by Kalanick and Garret Camp (Camp). In 2007, they both sold the start-ups they had co-founded for millions. Kalanick sold Red Swoosh to Akamai Technologies for $19 million while Camp sold StumbleUpon to eBay for $75 million. In 2009, Camp, while still being the CEO of StumbleUpon, began working on a prototype for Uber as a side project after he realized during a trip with his friends on New Year’s Eve that sharing the cost of transportation could make the cab service more affordable and persuaded Kalanick to join as UberCab’s Chief Incubator. The service was tested in New York in 2010 and was officially launched in San Francisco...

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UBER’S BUSINESS MODEL: UBER’S BUSINESS MODEL In the era of technological innovation, Uber’s business model, often called the two-sided marketplace , became increasingly popular in the industry.

According to Bill Gurley, General Partner, Benchmark and an early investor in Uber, the best feature of Uber’s business model was that “No Driver-Partner is ever told where or when to work. This is quite remarkable – an entire global network miraculously “level loads” ..

FINANCIAL PERFORMANCE OF UBER POST S-1 FILING: In 2019, Wall Street saw some highly anticipated Initial Public Offerings (IPOs) roll out, including that from Pinterest , Lyft , Levi Strauss and Co. , Zoom Video Communications and Uber. One major commonality among these IPOs was that the open price was higher than the IPO price. This was done by investment banks to help the companies get the money they wanted and make investors feel that they had made a good decision as an open price above the IPO price signalled that Wall Street had a lot of confidence in the future ROI potential of the company...

DISSATISFACTION AMONG TAXI UNIONS: While the launch of Uber provided an ample number of employment opportunities for people, taxi unions were not particularly happy with it. Taxi Unions across the globe had staged multiple protests against Uber, with the protestors considering the company as “unfair competition”...

DISSATISFACTION AMONG UBER DRIVERS: Uber had once been hailed as a catalyst for revolutionizing the way people looked at the taxi industry. Better incentives and fares than the industry standards persuaded drivers across the globe to partner with Uber as independent contractors. However, the motivation for drivers had declined significantly over the years. The most visible reason behind the growing dissatisfaction was the continuous wage cuts by Uber as a part of its cost-cutting exercises...

UBER’S RESPONSE TO GROWING UNREST IN THE LABOR MARKET: Uber Pro , according to the company’s website, was a “new rewards program that recognized drivers’ commitment and efforts so that they could reach their goals - on and off the road.” According to Daniel Danker, Product Director at Uber, ..

IMPACT OF CALIFORNIA ASSEMBLY BILL 5 ON GIG-ECONOMY: Platforms such as Uber or Lyft had, for a very long time, escaped from classifying their drivers as employees, thereby saving a major part of their revenues which they would otherwise had to spend on paying out salaries, perks and other benefits that employees of any company were entitled to. However, what could change the scenario for Uber was the California Assembly Bill 5 or AB 5 , which was introduced in 2019...

SELF-DRIVING VEHICLES – WILL THEY BECOME UBER’S SALVATION?: Uber’s continuing focus on self-driving vehicles was no secret. In August 2016, the then-CEO Kalanick revealed, in an interview to Bloomberg, that Uber was preparing to add self-driving cars to its fleet of cabs in Pittsburgh and a month later, ..

ROAD AHEAD: Uber demonstrated strong revenue growth in 2018 with revenue going up from $95 million in 2014 to $11.27 billion. ..

EXHIBITS:
Exhibit I: Travis Kalanick’s Encounter with Uber Driver, Fawzi Kamel
Exhibit II: Uber’s Consolidated Statements of Operations
Exhibit III: Shame on Uber Campaign
Exhibit IV: Fight for $15 Dollars Campaign
Exhibit V: Overview of Uber Pro Plans
Exhibit VI: For Fusion Self-Driving Cars


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