Uber Technologies Inc., today listed in the New York Stock Exchange is one of the finest examples of how a startup turned into a multi-billion company. An idea can pop out of nowhere in a human brain. This specialty of ours has led to all the advancement that we are proud of. Our ability to think differently and hunt for solutions to all hurdles is reflected in the growing number of startups every year. While only a limited number of startups actually succeed and prosper, the one that does are the big companies of tomorrow.
IDEA OF AN APP BASED SERVICE
Travis Kalanick and Garrett Camp, both millionaires by selling their former companies for $19 million and $75 million respectively, came up with the idea of Uber in December 2008. The duo was attending a tech conference in Paris, LeWeb, when they were unable to find a cab on the cold winter day. At this moment, Camp shared his experience where he ended up spending $800 for a private driver. This incident gave rise to the idea, what if one could order a cab from their mobile?
After their conversation, the entrepreneurs went different ways but Camp didn’t stop deliberating upon his startup idea and bought the domain name, “ubercab.com”. Camp along with his two school friends, Oscar Salazar and Conrad Whelan built the first version of the app in March 2009 where Kalanick served as a “mega adviser.” The first funding of Uber was from its founders itself, which was around $200,000. In January 2010, their first employee Ryan Graves was hired when he replied to a tweet by Kalanick. The idea was first tested in New York with three cars in early 2010 and then the first rider ordered a cab on 5th July 2010 to get a ride across San Francisco.
GROWTH AND RISE
Initially, Uber only had options for a black luxury car that cost 1.5 times more than the usual taxi. Ordering a cab was as simple as a tap and the service quickly became a hit among the techies of the area. Ryan Graves became the CEO in August 2010 but was replaced four months later by Kalanick. Graves then took the role of Chief Operating Officer and board member. During this period in October, a $1.25 Million seed funding was safeguarded from Jason Calacinis, Chris Sacca and Napster co-founder Shawn Fanning.
Uber was launched in New York City in May 2011. This was followed by international expansion to Paris, by the end of the year. The rise began when its low-cost project, UberX, was revealed to the world in July 2012. This service involved cheaper cars beside the luxury ones at a 35% lower rate. By early 2013, Uber had already operated in close to three dozen cities and allowed drivers to use personal vehicles. During this period, Uber received numerous funding over the years from Menlo Ventures, Jeff Bezos, Goldman Sachs and Google Ventures which made it a $3.76 Billion company by August 2013. The simplicity of ordering a cab with just a tap with good service and low rates proved to be a game-changer.
In August 2014, UberPool service was launched. This allowed riders to split the cost with others who were riding a similar route. During the same time, a food delivery service, UberEats was launched. In September 2016, Uber began its self-driving car service in Pittsburgh. Vehicles were equipped with cameras, lasers, GPS, lidar and radar. The company again raised $3.5 Billion from Saudi Arabia Public Investment Fund and $7.7 Billion from SoftBank at a valuation of $40 Billion in 2016 and 2017 respectively.
HURDLES ALONG THE WAY
However, this success story is accompanied by hurdles and criticism throughout its journey.
Cease-and-Desist Order: The Company received a cease-and-desist order from the Municipal Transportation Agency in October 2010. UberCab had to rebrand itself as Uber and buy the domain name Uber.com after the taxi industry argued that the company is marketing itself as a taxi business.
Algorithm Price Hike: Uber uses an automated algorithm that is based on supply and demand. In January 2012, the cab service provider was slammed for a price hike of six to seven times when the demand was high on the New Year’s Eve. A similar price hike took place during a snowstorm in New York in December 2013.
Lawsuit for Employment: In 2013, a lawsuit was filed against the company by thousands of former and current drivers, demanding to be treated as employees instead of contract workers. Being employees, the company would be forced to provide them with benefits, regulate work hours and pay minimum wages. The company later agreed to pay $20 million in 2019 to end the six-year-long legal battle.
DeleteUber Campaign: In January 2017, hundreds of riders took part in #DeleteUber campaign. Uber continued to provide service during a taxi driver strike which came in response to travel ban imposed by US President Donald Trump to Muslim countries.
Other Allegations: In February 2017, a former engineer published a blog on the sexist and toxic culture of the company. Following this, CEO Kalanick agreed to look into the matter and hired a former US attorney general for investigation. This was followed by a report that alleged employees of having cocaine. In the same month a lawsuit followed by Waymo that accused Uber of stealing trade secrets. Soon after this in June 2017, investigation reports found more than two hundred claims of discrimination and sexual harassment. This circumstance led to eventual resignation from Kalanick as the CEO and Dara Khosrowshahi filled the vacancy.
Accident and IPO: In March 2018, Uber’s self-driving operation stopped temporarily after the death of Elaine Herzberg through its self-driving vehicle. Uber came out with its IPO in 2019 at $45 per share and an initial market capitalization of $75.5 Billion. But, on the very first day, the share price dropped to $41.57 leading to a cumulative loss of $655 million to the investors.
Completing over 10 Billion rides in over 65 countries and 600 cities, Uber’s expansion has been phenomenal over the decade. Despite an increase in revenue, Uber has not been able to gain profit due to research and new projects. According to some estimates, it has close to 65-70% of the US ride-hailing market. CEO Khosrowshahi says he wants to connect people through bikes, buses, cars, automated vehicles, helicopters and many more. With the emergence of cab service providers, the automobile industry has taken a hit. People now prefer a cab rather than owning a car themself. This is a fine illustration how one startup can shape an entire industry.