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Uber has redefined our vision of transportation. The original Uber concept – a private ride summoned by tapping an app on your smartphone – was so simple and so attractive that it disrupted the industry of traditional taxis overnight.
It is more difficult to define what Uber is today. It's a familiar name and an application in everyone's pocket. It provides walks and offers food. It is a big employer, although Uber thinks its workers are not employees, but people who offer these rides and deliver food. It is in flying cars and races that to develop ones that behave themselves.
On April 26, Uber set the terms for its widely anticipated initial public offering. The company is seeking a valuation up to $ 91.5 billion, less than the $ 120 billion announced target, but it remains large enough for Uber's IPO to be the largest in the industry. largest in the US since the Chinese e-commerce giant Alibaba, which debuted in 2014. Uber plans to sell 180 million shares of $ 44 to $ 50 per share, which could bring in $ 9 billion . Current Uber investors are expected to sell 27 million additional shares for an amount of up to $ 1.35 billion.
As Uber prepares to list its shares on the New York Stock Exchange, under the ticker symbol UBER, it is hard to believe that this service did not even exist 10 years ago. Uber's journey from a startling start-up to a $ 90 billion company was not long in all things, but he beat all odds.
In the beginning
According to the tradition of the company, the idea of Uber was born from a snowy day in 2008 in Paris, when the co-founders, Travis Kalanick and Garrett Camp, could not take a taxi. A Kalanick profile in Business Insider 2014 told a different story: this camp began to think about creating a cheaper private car service after spending $ 800 for hiring a private driver for the New Year in the late 2000s.
Kalanick, Camp and a few other friends imagined UberCab in 2009 in San Francisco. The application was officially launched in July 2010, when UberCab connected its first driver to a black city car for a ride to San Francisco. A few months later, in a scenario that is repeated many times over Uber's life, the city orders him to stop and abstain.
AP Photo / Paul Sakuma
Letters from the San Francisco Municipal Board of Transportation and the California Public Utilities Commission ordered UberCab to immediately suspend all announcements and all operations as a transportation service on behalf of the City of Toronto. others, without preliminary authorization. "The name UberCab indicates that you are a taxi company or affiliated with a taxi company," wrote the local transport authority on October 20, 2010. "However, as there are no taxis in your fleet, we Let your affiliates and any other entity stop calling you UberCab. "
Uber has not blinked. "UberCab is an advanced transportation technology, a first in the market. It must be recognized that the regulations of the supervisory authorities of cities and states have not been designed taking into account these innovations, "wrote in a blog Ryan Graves, the first CEO of the company. post this month. The company never put the service on hold, but a few days later, in a small concession to the regulators, she gave up "Cab," after her name. From that moment on, it was just Uber.
"A moron named Taxi"
At the end of 2010, Kalanick took over the reins of the CEO of Graves and implemented a mantra of growth at all costs. The next years of Uber will be marked by a feverish expansion.
To accelerate growth, Uber created local operations teams and gave them carte blanche for their territories. The disordered and decentralized strategy has led to frequent mistakes. An Uber Arizona manager turned off a pilot in Albuquerque, New Mexico, who tweeted an article criticizing Uber. The Uber team in New York has ordered and canceled thousands of competitors' outings in order to steal their pilots and block their service. An advertising campaign in Lyon, France, has promised to pair Uber riders with "hot chick" drivers.
Uber also displayed a brutal disregard for privacy. In November 2014, the company's top executive in New York used an internal tool called "God View" to track a journalist's whereabouts. In the same month, another leader of the company threatened to tarnish critical journalists. All these incidents and blunders gave Uber a bad image. But that did not stop the popularity of his service. Being able to order, pick up and pay for a private ride from your phone was just too good.
In 2014, Uber was in 100 cities. The company also had a local competitor, Lyft, founded in San Francisco in June 2012. But the real enemy of the company, as Kalanick said, was "an asshole named Taxi."
REUTERS / Max Whittaker
Taxi companies hated Uber as much as consumers liked it. In many cities, taxi operators had mostly local monopolies over land transport. Anyone can not drive a taxi: you usually need the proper license, car and meter. Some cities have limited the total number of drivers allowed on their streets. In New York, where the famous yellow taxi is located, two licenses known as taxi medallions sold for $ 1 million each in 2011. The owners borrowed money for their medallions and took them banked to ensure their safety. (In 2018, 131 medallions sold for $ 170,000 each at a bankruptcy auction.)
As Uber unfolded city by city, a pattern was emerging. The company would quickly seduce runners with its efficient service, and drivers with its argument to earn extra money according to their own schedules. This helped Uber better pay the drivers at the time of launch and flooded the runners with coupons making his service more affordable. But Uber had to face strong and strong opposition from the local taxi industry as well as regulators and politicians closely linked to it.
Uber does not even pretend to follow the rules. Following the book created during his early confrontation with San Francisco, the company ignored local regulations and decried the politicians who tried to enforce them, considering them irrelevant. When challenged, Uber insisted that it was not a taxi company, but rather a platform that connected people who needed to travel with the drivers who wanted to provide them, a topic of discussion that would be adopted by many other startups in the "sharing" economy.
In August 2014, Uber hired former Obama campaign manager David Plouffe to lead his "campaign" against "Big Taxi". In 2015, 22 states passed legislation allowing abusive conduct that creates favorable rules for Uber, a dramatic blow to society and the carrier. model in difficulty.
Global priorities
While Uber was leading the fight against the US taxi industry, Kalanick focused on global markets, especially China. "In simple terms, China is the number one priority of Uber's global team," he wrote in a letter (pdf) to investors in the summer of 2015.
Uber Memo
China has long been a holy grail for global technology companies. China is huge, with more than a dozen cities with more than 5 million inhabitants, which means it offers unprecedented growth opportunities. It is also notoriously difficult for foreign technology companies to do business because of the government's poor understanding of the flow of information.
While Uber enjoyed a strategic investment from Baidu, China's leading search engine, it still had to contend with fierce local competition from taxi apps Didi Dache and Kuaidi Dache, which merged in February 2015 to become the company. Didi Chuxing. Like Uber, Didi was well funded and spent a lot of money on motorcycle riders and promotions for drivers to increase his market share. "You can go out, spend a lot of money in a city and gain market share, but it's not real," Uber, the head of operations in Asia, told the Financial Times in June 2016. to Uber. A few months earlier, Kalanick had revealed that Uber was spending $ 1 billion a year to compete in China.
REUTERS / Kim Kyung-Hoon
China has not been the only drag on Uber's finances. The company had to face stiff competition from companies that copied its model around the world. In July 2015, Uber committed $ 1 billion a year to India, where it competed with local rival Ola. In Singapore, Indonesia and other Southeast Asian countries, Uber faced Grab and Go-Jek. In addition to being expensive, these competitions required Uber to meet different needs than those in the United States. He tested automatic rickshaws and cash payments in India, as well as motorcycles in Thailand.
Uber's regional rivals in Asia have been supported by powerful investors. Ola, Grab and Didi collectively received hundreds of millions of dollars from the Japanese technology conglomerate Softbank. Didi and Grab also counted among their investors the Chinese online trading giant Alibaba. Didi, Go-Jek and Ola were supported by Tencent Holdings; even Apple put $ 1 billion behind Didi.
Uber won the United States through wear and tear wars. Uber had deeper pockets and was investing money in subsidies for drivers and consumers, and was waiting for competition to spread. But in China and Southeast Asia, Uber has proven itself. In August 2016, Uber did something very similar to Uber and made it. The company sold its China operations to Didi in exchange for a $ 1 billion investment and a close to 20% interest in the new merged entity.
Walking forward
Uber has spent years selling to drivers the idea that they could be their own boss and earn a lot of money while driving for Uber. It was a good story, especially since many Americans were still recovering from a recession that had taken their jobs and destroyed their economies. In 2014, Uber said half of its drivers in New York City earned $ 90,000 or more. He convinced other drivers to spend money on risky vehicle leases with cars approved for use on the Uber platform.
The problem was that the situation was largely untrue and in mid-January 2017, Uber agreed to pay $ 20 million to the US Federal Trade Commission for misleading the drivers about their claims. potential gains, as well as to misrepresent the terms of its vehicle financing programs. . Then, on January 28, years of anger and resentment at Uber erupted during a demonstration against the Trump Government's immigration policy at the John F. Kennedy Airport in New York.
The #DeleteUber viral campaign began with a tweet claiming that Uber had deliberately broken up a protest at the airport against Donald Trump's first "Muslims ban." This catalyst tweet was revealed to be misleading, but the emotions that it triggered were very real. More than 500,000 people were so ready to believe that Uber – a company that disregarded the law, attacked politicians, abused drivers, and sported a rude and arrogant CEO – was perverse, that she was suppressing the law. application of his phone.
#DeleteUber ushered in a year of calculation for Uber. In February, Susan Fowler, a former engineer at Uber, published a blog post detailing a year of harassment and systematic ill-treatment in the business. His story inspired other people to share similar stories, which led Uber to open numerous internal investigations, lay off several senior executives and lay off dozens of other employees.
In the same month, Kalanick was filmed on a tape reprimanding his driver Uber after he complained about price cuts by the company. And Waymo, the driverless auto company and subsidiary of parent company Google, Alphabet, sued Uber for allegedly stealing trade secrets. The lawsuit led Uber to dismiss Anthony Levandowski, then head of research on autonomous technologies.
The first half of 2017 revealed the deeply toxic culture that Uber and Kalanick had cultivated during the construction of the ride-hail company. By mid-2017, Uber was no longer a small start-up, but a company of about 15,000 employees spread across 450 cities, not to mention 2 million drivers. The corporate values that once resembled tech-bro's regulars – "always be crazy" and "meritocracy and the step forward" – took on a darker stance against so-called sexual harassment. Another business value, the "principled confrontation," seemed unthinking in the light of the Waymo lawsuit and a criminal investigation into software designed to escape the forces of order.
On June 13, 2017, as the spinoff continued, Kalanick announced a leave of absence as Chief Executive Officer. A week later, Kalanick resigned after being kicked out by his own council in a messy power struggle. In August, while Uber was looking for a new CEO, Uber's largest investor, Benchmark Capital, sued Kalanick for fraud and breach of contract.
Moving forward
At the end of August 2017, about two months after Kalanick's resignation, Uber appointed Dara Khosrowshahi to the position of CEO. Previously CEO of Expedia Group, Khosrowshahi spearheaded a long and arduous research process involving Jeff Immelt of General Electric and Meg Whitman of Hewlett Packard Enterprise. "I must tell you that I'm scared," wrote Khosrowshahi in a memo addressed to Expedia employees after accepting the Uber post.
REUTERS / Carlo Allegri
Uber took to Khosrowshahi quickly. The new CEO had experience in managing a large global company and displayed a calmer and more measured temperament than Kalanick. Khosrowshahi calmed the conflicts triggered by Kalanick, as London threatened to suspend Uber's license (in June 2018, Uber received a 15-month provisional license, a major victory for Khosrowshahi). He reconstituted the central management team, reshaped the values of the Uber company and ushered in important governance reforms, such as the "one share, one vote" policy that deprived Kalanick and other Uber investors of power excessive vote. He won a multi-billion dollar contract with Softbank.
Unlike Kalanick, who stated that he would take Uber in public "as late as possible," Khosrowshahi has quickly committed to an Uber IPO in 2019. From Khosrowshahi's many decisions over the course of his almost two years as CEO seem designed to get Uber fit for an IPO – which is not surprising because he has a huge salary.
In February 2018, less than a week after the start of the trial in a US court in San Francisco, Uber settled the dispute with Waymo over trade secrets. Under the terms of the settlement, Waymo received 0.34% of the shares held by Uber and Uber agreed not to incorporate Waymo's confidential information into its hardware or software.
In March, Uber sold its Southeast Asia business to Grab. The agreement represents Uber's third major concession to an international competitor, following its sale to Didi in China in 2016 and its merger with Yandex.Taxi in Russia in July 2017. In a note announcing the sale, Khosrowshahi told his Uber had "Too many battles on too many fronts and with too many competitors." For the first quarter of 2018, Uber recorded its first quarterly profit, thanks to the reduction in its international activities.
Khosrowshahi also insisted that Uber be more than a company of rides. He put resources behind the Uber Eats food delivery service and the Uber Freight trucking platform, launched respectively in 2015 and 2017. Gross bookings for Eats increased from $ 824 million in the third quarter of 2017 to , $ 6 billion in the fourth quarter of 2018. The new CEO has also acquired the Jump Bikes electric bike supplier and has partnered with the supplier of Lime electronic scooters. Kalanick, to his credit, had the initial vision of Uber as a logistics company. "If we can get you a car in five minutes, we can provide you with anything in five minutes," he told Vanity Fair in 2014. Khosrowshahi helped run it.
Uber still has his share of scandals. Shortly after the start of Khosrowshahi's tenure, Uber revealed a voluminous data breach in October 2016 that he had already paid to hackers to hide. In March 2018, an autonomous SUV struck and killed a woman in Tempe, Arizona, during the first known pedestrian fatality related to driverless technology. The incident led Uber to suspend driverless trials on US public roads for the next nine months and reorganize its testing operations, laying off hundreds of people in several cities.
The core business can also be in trouble. In addition to the quarter in which it made a profit after selling its international operations, Uber remains chronically unprofitable. The company lost $ 890 million in the second quarter of 2018, $ 1.1 billion in the third and $ 870 million in the fourth. (In 2018, it recorded a profit on all of its business through the first quarter.) In 2017, Uber lost more than $ 4 billion, more than Amazon in its first 17 consecutive quarters in a row. as an open society, all unprofitable. For the first quarter of 2019, Uber has recorded a net loss of about $ 1 billion on a business turnover of about $ 3 billion.
Uber's trajectory towards profitability is far from clear. Portage and food delivery are highly competitive activities. On April 11, Uber acknowledged in its IPO that it relied on "significant financial incentives for drivers as well as discounts and promotions for consumers" and warned that these discounts would likely be maintained. Uber also revealed that it is charging lower fees to some of Eats' largest restaurant chains, which could cause it to lose money through these transactions. The danger of subsidizing a service too long is that it can be difficult to stop these subsidies and keep your customers. Uber's competitor, Lyft, which was made public on March 29, warned in his report that it could never become profitable. The stock is down 20% from the price of its IPO.
Driverless cars, the technology on which Uber has bet his future, also constitute a costly bet and far from being acquired. Kalanick, who described driverless cars as "fundamentally existential" for Uber, said they would make helicopter travel extremely cost-effective by eliminating its main cost, human drivers. Uber spent $ 457 million on independent technology research and development in 2018, up from $ 384 million in 2017. It recently raised $ 1 billion for this unit from investors such as Softbank and Toyota. . At the current Uber pace, this money could disappear within two years, although it seems unlikely that the company has a fleet of robots to prove it.
Perhaps more worrying for investors, Uber slows down. Uber gross bookings in the quarter ended December 31 reached $ 14.1 billion. This figure includes customer spending on Uber rides, Uber Eats orders and other Uber services. This translates into a 30% year-over-year growth rate, the lowest growth recorded by the company throughout the year. Uber has increased its revenue, or the share of money it retains from these bookings, to 25% in the fourth quarter, its slowest year-over-year growth rate in 2018. The share of business turnover that the company retains on orders from Eats has from 13.3% at the end of 2017 to 6.4% in the fourth quarter of 2018. The slowdown in activity at Uber it's continued in the first quarter of 2019.
As he embarks on a traditional pre-IPO presentation tour, Uber hopes to convince potential investors that it may be the Amazon of transportation. "We create opportunities by putting the world in motion," says the company in large white fonts on a black background in the preface of its bid documents.
Whatever you believe about Uber, the slogan is true. Uber has made more than 10 billion trips, has expanded to over 700 cities on six continents and has attracted 91 million people who use its platform every month, a figure that exceeds the entire German population . The way business is sold in public markets will not change the fact that Uber in 10 years has achieved an incredible feat and changed the world in a way we probably can not look back.
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