uber's business model _ abii-ndoh, godwin
TRANSCRIPT
ANALYSING UBER TECHNOLOGIESINC’S BUSINESS MODEL Abii-Ndoh, Godwin
Tunmise
AGENDA An Overview of the Company
What Does Uber Do?
End Users and Suppliers
Uber’s Operational Framework
Business Strategy
Financial and other Key Figures
Competitive Analysis: Uber vs Lyft
SWOT Analysis
Challenges and Solutions
Q & A
AN OVERVIEW OF THE COMPANY
Key Peopl
e Head of Global Operations
Co-Founder and CEO
Travis Kalanick
Co-Founder and
Chairman
Gareth Camp
Chief Technology
Officer
Thuan Pham Ryan Graves
Ubercab was founded as a privately held company by Travis Kalanick and Garett Camp in 2009.
Ubercab received $200,000 in seed funding that year, as it began operations as a transportation company in San Francisco, California.,
The company primarily develops, markets and operates the Uber app, which allows individuals with smartphones to submit a trip request which is then routed to Uber drivers who use their own vehicles to provide taxi services.
In 2011, the company changed its name to Uber and began expanding each month into new cities in the USA, and by 2012, it had begun expanding internationally.
As at September 15, 2015, Uber was operational in 327 cities, in 60 countries and estimated to be worth over $50 billion.
WHAT DOES UBER DO?Uber is a network orchestrator; it connects passengers with drivers within minutes. It does this by:
Providing options and varieties in the transportation service
Managing a network of drivers and passengers with a mobile application
Uber’s Competitors
Side Car Didi
Kuaidi
TaxiForSure
Lyft
Curb
Uber has Eazy Taxi and Tranzit Nigeria to reckon with in the Nigerian ride-sharing market
END USERS AND SUPPLIERSEn
d U
sers
Supp
liers
Users Who Value Time
High-End Users
Tech-Savvy Users Urban Middle Class
Drivers
UBER’S OPERATIONAL FRAMEWORK
Uber’s Operational Stategy
Uber’s structure requires next to no inventory. Uber does not pay fees to regulatory institutions since it does not
regard itself as a “taxi operator” Uber claims that it is not a taxi service provider, but a
technology company that merely creates a market• It is a network orchestrator that matches drivers
with passengers• Unlike the case with regular taxis, Uber driver-
partners do not pay professional fees to deliver their services.
Uber refers to its drivers as partners not employees Most Uber drivers work part time.
1. Uber sets prices for rides2. Customers pay Uber3. 20% of the ride fee goes
to Uber (Depending on the city and competition)
4. Uber covers marketing, R&D and part of the insurance expenses
Surge Pricing: Meeting High DemandUber rates increase when demand cannot be met to ensure reliability “Good View”: Real time aerial view of the
movement of cars “Heat Mapping” to indicate where high
demand is The app automatically detects situations of
high demand and low supply and adjust prices accordingly, depending on the level of shortage
BUSINESS STRATEGY First Mover Advantage
• Accumulate a large partner installed base. Like most services, real-time ride sharing apps thrive on the size of customer base. Uber works towards rapidly expanding globally. Currently in 327 cities, 60 countries (including Nigeria), and 6 continents, Uber seeks to grow large enough to dominate the ride-sharing market and make itself impossible to ban.
Barrier to entry through patent applications Network and marketing through quality ride service
delivery and healthy Uber-partner relationships Aggressive tax avoidance through shell companies in tax
havens• Uber is built from the ground up to pay as little taxes
as possible in as few places as it can.UberGarage – Supporting Services UberFresh
• Delivery of lunch and various products
• Based on the same model (app, drivers, location, payment, rating)
UberCARGO UberPool UberRUSH Uber for Business
• Providing reliable rides for customer-company employees
Customers Price
Promotions Partnerships
with local establishments eg. restaurants, shops, airports, hotels and events
DriversPartner reward programs Vehicle
Financing Health care
incentives Car insurance
expenses covered Why People Choose Uber
To earn more income To have more flexibility in their
schedule To be their own boss
FINANCIAL AND OTHER FIGURES Uber is presently valued at $51 billion. Its investors include Goldman Sachs,
Baidu, Google Ventures, Menlo, Benchmark, Lowercase Capital, and First Round. Uber accrues high administrative costs. It expended $59 million on this in
2014’s Q2 alone In the US, Uber has over 160,000 active drivers, receiving $656.8 million of
payments during Q4 2014 In 2014, Uber processed $2.91 billion in bookings and generated $600 million
in revenue as a result. Uber is expected to process $10.84 billion bookings this year alone. Hence, an
estimated $2 billion in revenue is expected. Projections for 2016 are much larger. With $26.12 billion dollars and
approximately $5 billion projected for bookings and revenues respectively It fulfils one million rides daily, has over eight million users and encourages
them to spend an average of $100 daily, a minuscule amount compared to what individuals spend on other apps.
14% of its drivers are female The top two reasons for drivers who choose Uber are higher income (91%) and
work-day flexibility (87%)
2014 2015 20160
5000
10000
15000
20000
25000
30000
Bookings ($millions)Revenue ($millions)
Uber’s Bookings and Revenue Figures and Forecast
COMPETITIVE ANALYSIS: UBER VS LYFTUber Lyft Winn
erValuation $51 billion $2.95 billion UberPrice Low or average High UberSurge Pricing No Cap Cap at 200% TieCompany Revenue (2014)
~$600 million ~$130 million Uber
Market Share ~46% ~10% UberCompany Investment (2014)
~$405 million ~$303 million Uber
Safety Insurance/Driver Rating
Insurance/Driver Rating
Tie
Customer Support Online support 24/7 Call centre TieProfessionalism Feels Professional Feels Friendly UberService/Experience Passenger – driver
relationshipFeels friendly Lyft
Legality Issues on real-time ride sharing TieUber Wins!
SWOT ANALYSISStrengths Uber currently has the largest
market share amongst all mobile ride-sharing apps
Uber has expanded the most in terms of size, number and reach amongst its competitors
Uber is the largest and most valuable ride-sharing company in the world
Uber’s app is widely aknowledged to be reliable and user friendly
Weaknesses Reports from Bloomberg claim
Uber has been operating at a loss for some time now
Uber users still express safety concerns about using the ride-sharing app.
Users also have concerns about the app’s privacy policies
Opportunities While Uber may be in 60
countries currently, Uber has not entered into over a 100 more. Hence, many more markets to tap from.
Uber’s growing investment in research on self-driving vehicles may yield unending possibilities.
If developed optimally, Uber’s Garage services will generate large sums of revenue in the future.
Threats Uber faces fierce competition from
companies like Lyft in the U.S. and companies like Didi Kuaidi and TaxiForSure in global markets
Uber is continuously plagued by costly legal battles and stringent regulatory sanctions from local authorities in the cities in which it operates
The company has been banned from operating in many cities.
Uber recently appealed against a court ruling mandating the company to reclassify its driver-partners in the U.S to employees. It could cost Uber as much as $209 million to reclassify its driver-partners.
Many campaigns exist that urge users to cease using the app and delete their Uber accounts.
CHALLENGES AND SOLUTIONSChallenges/Issues SolutionsTrust and Safety Issues Alleged Sexual Assaults Alleged Kidnapping
Driver/passenger information, GPS following rides
Panic button Background checks, identification
of new technologiesLegal Issues Insurance coverage for accidents Regulatory laws - illegal taxi
operation?
Metromile’s Uber Car Insurance Insurance Coverage for UberX The application’s terms and
conditions Conforming to the law
Surge Pricing Cap on fares for certain events
Q & A