Uber's Business Model

1. ANALYSING
UBER
TECHNOLOGIES
INC’S BUSINESS
MODEL
Abii-Ndoh, Godwin Tunmise

2. 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

3. AN OVERVIEW OF THE COMPANY
Key
People
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.

4. 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

5. END USERS AND SUPPLIERSEndUsersSuppliers
Users Who Value
Time
High-End
Users
Tech-Savvy
Users
Urban Middle Class
Drivers

6. 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 rides
2. Customers pay Uber
3. 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 Demand
Uber 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

7. 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
Drivers
Partner 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

8. 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 $100 daily, a minuscule amount compared to what individuals spend on other apps.
 14% of its drivers are female
 The top two reasons for drivers who choose Uber are higher income (91%) and work-day
flexibility (87%)
0
5000
10000
15000
20000
25000
30000
2014 2015 2016
Bookings ($millions)
Revenue ($millions)
Uber’s Bookings and
Revenue Figures and
Forecast

9. COMPETITIVE ANALYSIS: UBER VS LYFT
Uber Lyft Winner
Valuation $51 billion $2.95 billion Uber
Price Low or average High Uber
Surge Pricing No Cap Cap at 200% Tie
Company Revenue (2014) ~$600 million ~$130 million Uber
Market Share ~46% ~10% Uber
Company Investment (2014) ~$405 million ~$303 million Uber
Safety Insurance/Driver
Rating
Insurance/Driver
Rating
Tie
Customer Support Online support 24/7 Call centre Tie
Professionalism Feels Professional Feels Friendly Uber
Service/Experience Passenger – driver
relationship
Feels friendly Lyft
Legality Issues on real-time ride sharing Tie
Uber Wins!

10. SWOT ANALYSIS
Strengths
 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.

11. CHALLENGES AND SOLUTIONS
Challenges/Issues Solutions
Trust and Safety Issues
 Alleged Sexual Assaults
 Alleged Kidnapping
 Driver/passenger information, GPS
following rides
 Panic button
 Background checks, identification of new
technologies
Legal 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

12. Q & A