Uber's Business Model

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These slides use concepts from my (Jeff Funk) course entitled Biz Models for Hi-Tech Products to analyze the business model for Uber’s taxi service. Uber’s service enables anyone to provide taxi services and it provides dynamic pricing for better matching of supply and demand. Its value proposition for potential drivers is the opportunity to work as driver on their own hours. Its value proposition for user to lower taxi fares during most times of the day and a higher supply of taxis (and higher prices) during peak demand. The customers are tech-savvy and smart phone users who value their time. Uber receives payments directly from customers and keeps a percentage of these payments as its income. Uber’s patents for a demand-price algorithm represent a barrier of entry and thus a method of strategic control.

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Uber's Business Model

  1. 1. Biz Model for Uber Technologies Inc. A REAL-TIME RIDESHARING SERVICE AMBRE FISCHER | ARNAUD LEGRIS | CHRISTOPHER LAURENTIUS | JOYCE LIM | KEONG PEI QUAN | RAYMOND UNG Business models for other ride sharing companies such as Ola Cabs (http://www.slideshare.net/Funk97/presentations) and for different types of ride sharing such as multi-passenger ride sharing (http://www.slideshare.net/Funk97/presentations) can be found on my slide share accounts.
  2. 2. 1. Background of taxi services and real-time ridesharing 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 2 Agenda
  3. 3. Background – Taxi Services More convenient than other modes of public transport when going at a specific destination Higher fees than other modes of public transport  Fixed price based on base fare, distance, time, peak hours/weekends & public holidays, advanced booking fees Requires a government license to be a taxi driver Car rented by the taxi operator Taxis can be hired  Hailing on the street  Waiting at specific taxi stations  For immediate booking by SMS, phone call, app  For advanced booking by phone call, apps UBER TECHNOLOGIES INC. 3
  4. 4. 1. Background of taxi services 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 4 Agenda
  5. 5. What does Uber Technologies Inc do? Network Orchestrator, connecting passengers with drivers  Manages a network of drivers and passengers through a phone application  Provides options and varieties in the transportation service UBER TECHNOLOGIES INC. 5 Source of image: https://www.uber.com/ Toyota Camry BMW 7 series GMC Yukon Denali Mercedes S-Class
  6. 6. Uber: Real-Time Ridesharing (FROM) RIDESHARING Shares the same car and destination Shares the cost of gas, toll fees, parking Pairs passengers and drivers who are heading in the same direction / heading to the same destination Time Sharing (TO) REAL-TIME RIDESHARING Shares the same car and destination Individual costs Uses latest technologies Uses GPS and smartphones Social Networks Geared towards profit or commercial gain UBER TECHNOLOGIES INC. 6 Incremental Evolution
  7. 7. UBER TECHNOLOGIES INC. 7 Passengers No Destination decided byDrivers Profit-driven Ride Sharing: Neighbor, Colleague, Carpool, etc… Real-Time Ride Sharing: Uber, Lyft, etc.. Yes Source of image: http://marketrealist.com/analysis/stock-analysis/technology/internet/charts/?featured_post=70133&featured_chart=70136 Uber: Real-Time Ridesharing
  8. 8. 1. Background of taxi services 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 8 Agenda
  9. 9. EVERYONE CAN BE A DRIVER Flexibility to drive Extra Income Drive with Assurance Value Proposition UBER TECHNOLOGIES INC. 9 EVERYONE’S PRIVATE DRIVER One tap to ride Reliable Pickup Status Sharing Ride Feedback Cashless
  10. 10. Value Proposition – Network Orchestrator UBER TECHNOLOGIES INC. 10 Passenger Driver Request for ride Notification of acceptance Notification of the request Accepts request - Pay the ride - Give feedback Picks the passenger and brings him to the destination - Indicates navigation - Estimates fare & time App GPS
  11. 11. Uber’s structure is simpler, thus generating lower costs which allows them to propose a lower price  No inventory  Uber doesn’t have to pay fees as they are not “taxi service operators” They are network orchestrators matching drivers and passengers Drivers do not have to pay for professional fees to deliver the service Uber drivers are partners not employees  Ease of becoming driver  More drivers than taxi drives in NYC 1  Majority of drivers are part time , only 38% worked full time 2  Part time driver can accept lower revenues than normal taxi drivers UBER TECHNOLOGIES INC. 11 Value Proposition – A cheaper ride compared to Taxis 1 http://www.digitaltrends.com/mobile/more-uber-cars-yellow-taxis-nyc/ 2 http://techcrunch.com/2015/01/22/uber-study/
  12. 12. DEMAND/SUPPLY ALGORITHM Heat mapping to indicate where the demand is “God View” – real time aerial view of the movement of cars1 Plenty of other data analyses, such as  Analyzing how many times the app is open  Analyzing accuracy of demand prediction to refine the prediction algorithm  Calculating probability of accurate destinations and popular destinations2 SURGE PRICING ALGORITHM Automatically detects situations of high demand and low supply and adjusts price accordingly, depending on the level of shortage. UBER TECHNOLOGIES INC. 12 1 http://www.reuters.com/article/2014/12/16/us-uber-privacy-idUSKBN0JU2DT20141216 2 http://blog.uber.com/passenger-destinations, http://blog.uber.com/2012/11/12/uberdata-mapping-a-citys-flow-using-ubers-ridership-data/ Source for both images: http://www.wired.com/2011/04/app-stars-uber/ Value Proposition – Surge Pricing: Meeting high demand Surge Pricing : Uber rates increase to ensure reliability when demand cannot be met Encourage more driver to be available.
  13. 13. US 2013/0246207A1 (pending grant)  System and Method for Dynamically Adjusting Prices for Services Pricing algorithm automatically detects situations of high demand and low supply and hikes the price in increments, depending on the scale of the shortage.  Algorithm results in increased supply and reduced demand.  “Through these two mechanisms, the company is able to (a) increase supply, (b) assure reliability, a key tenet of the company, and (c) maximize the number of completed rides.” – Bill Gurley, Uber investor and board member UBER TECHNOLOGIES INC. 13 Source of image: Patent No: US 2013/0246207A1 by Uber Technologies Inc, System and Method for Dynamically Adjusting Prices for Services E.g. prices to be changed if utilization rate falls below 60% or above 80%; or demand and supply model that compares the number of drivers to passengers. Price adjusted relative to a fixed price i.e. using a multiplier Value Proposition – Surge Pricing: Patent Pending
  14. 14. UBER TECHNOLOGIES INC. 14 Value Proposition – Surge Pricing Example(1) Demand – Supply Equilibrium $10 Normal Fare
  15. 15. UBER TECHNOLOGIES INC. 15 $10 Fare Increases $15 Value Proposition – Surge Pricing Example(2) Demand > Supply
  16. 16. UBER TECHNOLOGIES INC. 16 $15 Fare Decreases $10 Value Proposition – Surge Pricing Example(3) Demand < Supply
  17. 17. 1. Background of taxi services 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 17 Agenda
  18. 18. So who do you think are Uber’s customers? UBER TECHNOLOGIES INC. 18 1) Drivers 2) Passengers 3) Both? Source: Google Search Definitions
  19. 19. Uber’s definition of customer: Individuals requesting or ordering an on-demand service, where a service provider refers to individuals or entities that can provide the requested service e.g. car/taxi service. UBER TECHNOLOGIES INC. 19 Passenger Uber Driver $$$ Commission CUSTOMER Paying for the service (transportation) PARTNERS Complementary Service Provider, NOT customer
  20. 20. UBER TECHNOLOGIES INC. 20 Customer Segments (by needs) I want a ride (Taxi, UberX, UberTaxi, Lyft) I want a luxury ride (Limousine Taxi, UberBlack) I’m willing to pay more to get a ride NOW (UberX, Lyft)  I want the highest probability of getting a ride  I want a taxi NOW I want to share the ride to reduce cost (UberPool) I want a scheduled ride (Taxi) I want a consistent good user experience (Uber, Lyft) Key Differentiators between the different options: Price Time User experience Options
  21. 21. EARLY ADOPTERS Tech-Savvy Users Smartphone Users Users who value time  People who appreciates having a ride confirmation shortly after the need arises Users with (limited) spending power. They are either  People who wish to save money but still get the convenience or  They have the power to hail a ride at any price EXAMPLES OF CUSTOMERS UberPool – Non-working group e.g. students, young adults UberX – e.g. working adults, people in a rush UberTaxi – e.g. the usual taxi passenger UberBlack (Premium) – e.g. professionals, people who wish to show off UBER TECHNOLOGIES INC. 21 Targeted Customer Segments (Real-time Ridesharing)
  22. 22. Uber’s Estimated Market Share (NYC Jan 2015) 40% of Total NYC Taxi Market (advanced booking taxis, Uber, Lyft) 45% of advanced booking Taxi Market 17% of Total Taxi Market UBER TECHNOLOGIES INC. 22 Total Taxi Market 135 million rides ~$1.9 Bn Target Market 55 million rides ~$1 Bn Uber Market Share 25 million rides $0.4 Bn Total Taxi market : http://www.statisticbrain.com/taxi-cab-statistics/ Uber Marke share: http://www.northjersey.com/news/move-to-regulate-ride-share-services-like-uber-lyft-advances-in-nj-video-1.1292267 Market Comparison in %: http://www.businessinsider.com/uber-revenue-rides-drivers-and-fares-2014-11?op=1
  23. 23. 1. Background of taxi services 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 23 Agenda
  24. 24. Value Capture UBER TECHNOLOGIES INC. 24 Pricing & Payment  Uber set prices for rides  Peak hours  Customers pay Uber with credit card (not the drivers) Splitting the Proceeds  20% of the ride go to Uber  Commission-based  Depends on the city and competition From revenues to Profits  Uber cover expenses (R&D, marketing…)  Employees & infrastructure in cities Reinvest to Grow  R&D and acquisition of new business
  25. 25. 1. Background of taxi services 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 25 Agenda
  26. 26. Competition UBER TECHNOLOGIES INC. 26 Smartphone Applications Real-time Ridesharing Taxis
  27. 27. Competitive Analysis – Uber vs Taxi (1) Uber Taxi Advance Booking No Yes Hiring Method Smart Phone App Flag/Call Center/App/Dedicated taxi queue Payment Cashless Cash/Credit Card Driver/Passenger Rating Available NA Pricing Structure Flexible Structured Fare Sharing Anyone Limited to friends ETA to Destination Available NA ETA of the Ride Available Available (Apps Only) Car Self Rented from Taxi Company Driver’s perspectives Flexible Rigid Law & Regulation (more on this later) Grey Area Well-defined Value Capture to Company Commission Fee Rental Fee, Advertisement UBER TECHNOLOGIES INC. 27
  28. 28. UBER Base fare Metered fare based on time/distance Surge pricing  During high/low demand TAXI Base fare Metered fare based on time/distance Additional costs  Peak hour / midnight surcharge  Public Holiday surcharge  Advanced booking fee  Luggage fees  Area based surcharge  City  Airport UBER TECHNOLOGIES INC. 28 Competitive Analysis – Uber vs Taxi (2) Pricing Structure
  29. 29. UBER TECHNOLOGIES INC. 29 Graphs from: http://www.businessinsider.sg/uber-vs-taxi-pricing-by-city-2014-10/#.VQ7j7-6UfP8 Competitive Analysis – Uber vs Taxi (3) Pricing Structure
  30. 30. UBER Requirements  No professional taxi license required  Require your own vehicle Income  Flexible timing – part time work  Surge pricing may provide higher hourly wages Expenses  Petrol  Personal insurance  Maintenance of personal vehicle TAXI Requirements  Professional taxi license / “medallion” Income  Full time work (i.e cover daily rental work)  Fixed surcharges Expenses  Fixed rental fees for taxi to be paid  License fees as a taxi driver to be paid UBER TECHNOLOGIES INC. 30 Competitive Analysis – Uber vs Taxi (4) Driver’s Perspectives
  31. 31. UBER TECHNOLOGIES INC. 31 Image from: http://techcrunch.com/2015/01/22/uber-study/ Competitive Analysis – Uber vs Taxi (5) Driver’s Perspectives
  32. 32. UBER LYFT Winner Cost Lower on Average Higher UBER Surge Pricing No Cap Cap at 200% LYFT (Passenger POV) Surge Pricing No Cap Cap at 200% UBER (Driver POV) Company Investment (2014) ~$405 Million ~$330 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 Friendly Ride LYFT Legality Issues on real time ride sharing TIE Winner UBER UBER TECHNOLOGIES INC. 32 Competitive Analysis – Uber vs Lyft (1)
  33. 33. Similarities  Demand/supply algorithm  Both increases supply during high demand periods but the limit of Prime Time also means that comparatively, Uber partners would earn more during the same period if demand is extremely high. Differences  Surge Pricing: no cap (except for “abnormal disruption of the market” – more on that later)  Prime Time: 200% price surge i.e. cap of 3x fare  NYE 2014: 400% increase i.e. cap of 5x fare The success of Uber’s Surge Pricing  2 million matched rides on NYE 2014 (worldwide) UBER TECHNOLOGIES INC. 33 Source of image: http://blog.uber.com/cheersto2015 Competitive Analysis – Uber vs Lyft (2) Surge Pricing vs Prime Time
  34. 34. Competitive Analysis – Uber vs Lyft (3) Prices in different states UBER TECHNOLOGIES INC. 34 $0.00 $0.50 $1.00 $1.50 $2.00 $2.50 $3.00 COST Source of image: Uber and Lyft websites
  35. 35. Overall Competitive Analysis UBER TECHNOLOGIES INC. 35 0 1 2 3 4 5 6 Advance Booking Law & Regulation Hiring Method (User Friendliness) Cashless Payment Fare Sharing Driver’s Flexibility Go-to Market Car Flexibility User Experience Ride Information RATING Strategy Canvas for Uber, Lyft and Taxi Uber Taxi Lyft Uber Taxi Lyft Advance Booking 0 5 0 Law & Regulation 3 5 3 Hiring Method (User Friendliness) 5 3 5 Cashless Payment 5 3 5 Fare Sharing 5 3 5 Driver’s Flexibility 5 3 5 Go-to Market Car Flexibility 5 3 3 User Experience 5 3 5 Ride Information 5 3 5
  36. 36. 1. Background of taxi services 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 36 Agenda
  37. 37. First mover advantage  Accumulate a larger parnter installed base, and real- time ridesharing apps thrive on the size of customer base Barrier to entry  Patent applications  If granted, Uber will be the only company in this line of business to have related patents  But most patents refer to business methods Network Effects  Customer  Partner UBER TECHNOLOGIES INC. 37 Source of image: http://patentvue.com/2014/03/04/sidecar-and-uber-patent-portfolios-lead-the-ride-sharing-industry/ Strategic Control
  38. 38. Strategic Control UBER TECHNOLOGIES INC. 38 Retain & Gain New Drivers Partner rewards program • Vehicle Financing • Health Care Incentives • etc Customers • Price promotions • Partnerships with local establishments e.g. restaurants, shops
  39. 39. 1. Background of taxi services 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 39 Agenda
  40. 40. Issues (worldwide) 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 • App’s terms and conditions • Conforming to the laws Surge Pricing • Cap on fares for certain events UBER TECHNOLOGIES INC. 40
  41. 41. UBER TECHNOLOGIES INC. 41 Source of image: https://www.uber.com/safety Issues: Background checks All drivers are screened against:  County courthouse records  Federal courthouse records  Multi-State Criminal Database  National Sex Offender Registry screen  Social Security Trace (lifetime)  Motor Vehicle Records (historical and ongoing) In Nov 2014, Uber started a safety review to identify new technologies such as  Biometrics and  Voice verification Further suggestions by U.S. Congress, Mar 2015  Adopt fingerprint-based background checks
  42. 42. Issues (worldwide) 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 • App’s terms and conditions • Conforming to the laws Surge Pricing • Cap on fares for certain events UBER TECHNOLOGIES INC. 42 “You understand, therefore, that by using the application and the service, you may be exposed to transportation that is potentially dangerous, offensive, harmful to minors, unsafe or otherwise objectionable, and that you use the application and the service at your own risk.” - Uber’s Terms & Conditions
  43. 43. UberBlack, UberSUV, or UberTAXI rides are provided by commercially licensed and insured partners and drivers. How about UberX? Uber introduced insurance coverage for the UberX rides in Mar 2014.  $1 million of liability coverage per incident.  $1 million of uninsured/underinsured motorist bodily injury coverage per incident.  Contingent comprehensive and collision insurance.  No fault coverage (e.g., Personal Injury Protection)  $50,000/$100,000/$25,000 of contingent coverage between trips. UBER TECHNOLOGIES INC. 43 Issues: Insurance Coverage for UberX Source of image: http://blog.uber.com/ridesharinginsurance
  44. 44. Covers drivers for miles in between trips  Uses a cellular gadget that plugs into their vehicle’s diagnostic port.  Recognizes when drivers are working and are covered by Uber’s insurance so it only charges them for miles they drive for personal use. Complements UberX Car Insurance  $50,000/$100,000/$25,000 of contingent coverage between trips. As a result… Drivers do not have to fear  Being denied coverage by personal insurance  Potential limitations of their personal insurance coverage while logged on to a rideshare app. UBER TECHNOLOGIES INC. 44 Issues: Metromile’s Uber Car Insurance Source of image: http://blog.metromile.com/blog/2015/1/28/uber-partnership
  45. 45. Issues: Regulatory laws – is Uber legal? UBER TECHNOLOGIES INC. 45 Source of image: http://www.taxi-deutschland.net/images/presse/Infografik_Uber-legal-issues_EN_v12_RGB_2015-02-06_final.jpg, used under the CC BY-SA 4.0 Intl Licence
  46. 46. Issues (worldwide) 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 • App’s terms and conditions • Conforming to the laws Surge Pricing • Cap on fares for certain events UBER TECHNOLOGIES INC. 46
  47. 47. Issues: Surge Pricing UBER TECHNOLOGIES INC. 47 Source of image: http://www.businessinsider.sg/ubers-highest-surge-price-ever-may-be-50x-2014-11/#.VRuIMO6UfP8 x normal rate min rate A 1km ride will cost you USD 650
  48. 48. Issues: Surge Pricing Uber came under fire for the surge pricing algorithm during the events:  Hurricane Sandy  (elsewhere) Sydney Hostage Siege Capped surge pricing from Jan 2015 for “abnormal disruption of the market” events  “If Uber puts surge pricing into effect during an abnormal disruption of the market, Uber will not set the price for any transportation option above a multiple of the base fare to the determined…based on the prices set by Uber for the same transportation option…during the sixty days preceding the commencement of the abnormal disruption of the market. To determine the price cap for a transportation option in a city and surrounding area, Uber shall first identify the three highest prices it set, on different days…Price cap shall be the next highest price that was set for the same transportation option …not including the days on which the three highest prices were set.” UBER TECHNOLOGIES INC. 48 i.e. If in the past 60 days, the 4 highest multipliers were 3x, 4x, 5x and 6x, Uber will charge a maximum of 3x the normal fare for such events.
  49. 49. 1. Background of taxi services and real-time ridesharing 2. What does Uber Technologies Inc do? 3. Value Proposition 4. Customers and Market 5. Value Capture 6. Competition 7. Strategic Control 8. Uber, an issue? 9. Improvements & Alternatives 10. Q&A UBER TECHNOLOGIES INC. 49 Agenda
  50. 50. UberGarage - Experimentation UberFRESH & UberESSENTIALS  Delivery lunch & various products  At an experiment stage  No delivery fee for Essentials fixed $3 fee for Fresh, no tips to the driver  Make money with product margin  Based on the same business model (drivers, app: location, payment, rating)  Create value to customers: convenient, very fast (10 minutes) UberCARGO UberRUSH UberPOOL Uber Business  Reliable ride for your employees UBER TECHNOLOGIES INC. 50
  51. 51. Improving Existing Business UBER TECHNOLOGIES INC. 51 UBER DRIVERS PASSENGERS Extra Insurance Coverage Uber Mobile App Protection Driver/Rider Preference Incentive Program
  52. 52. Alternative Business Models – Customer Segments UberAlternate  Similar to UberX but using other forms of transport e.g. bicycles or motorbikes.  Target segment: Passengers in developing countries / countries where public transport is not well established UberAlternateX  High end luxury transport  Target segment: Niche segment: luxury  Available for high end car UBER TECHNOLOGIES INC. 52
  53. 53. Alternative Business Models – Customer Segments UberTour  UberX for tourist attractions within the city/country  Planning of ride itinerary and following available tour vehicles  Target segment: Tourists with their own (flexible) itinerary UBER TECHNOLOGIES INC. 53
  54. 54. UBER TECHNOLOGIES INC. 54 Alternative Business Models – Value Capture UberCredits  Passenger can buy $100 of UberCredits and be rewarded with an extra $20.  Entice more passengers to use Uber, which will increase demand and make drivers happy. UberAdvertising  Advertisements on the app and within the car  Advertising revenue
  55. 55. In the Future (10-15 years).... Driverless Uber  Use driverless car, when driverless car is available & legalized Uber Next  Predict the need of a ride based on data, schedule, etc UBER TECHNOLOGIES INC. 55 Alternative Business Models – Long Term
  56. 56. Lastly, if anyone is interested…. Apply now through: https://www.uber.com/jobs/54600/apply?gh_jid=54600 UBER TECHNOLOGIES INC. 56
  57. 57. Q&A P.S. FOR QUESTIONS ON JOB APPLICATIONS, PLEASE SEND DIRECTLY TO UBER. UBER TECHNOLOGIES INC. 57
  58. 58. UBERX UBERPOOL UBER TECHNOLOGIES INC. 58 Images from: http://blog.uber.com/UberPoolDriver Backup Slide: UberPOOL
  59. 59. Backup Slide: Surge Pricing Technology example In San Francisco, there can a high number of requesters at a certain time where transportation services are requested so that there is a spike in demand, while supply remains the same. In comparison, in a nearby city, such as San Jose, there is no spike in demand for the transportation services or food services at the same time. Due to the limited availability (e.g., inventory) of drivers and vehicles, the system can adjust the price for the service (e.g., increase the cost) for the requesters in San Francisco (or to requesters in a region within San Francisco). For those requesters and service providers, the price for the particular service can be adjusted (e.g., increased), while the price (e.g., the default price value) for other requesters and services providers in other areas remains the same. The parsed data can also be stored in one of the system databases, such as a pricing data database, so that the price adjustment can retrieve previously parsed data at different times. Data is stored in appropriate system databases so that a historical record can be maintained. The historical record can include requester data and provider data received at particular dates and times previously received. In some examples, the historical data can also be used to approximate the amount of requesters and the amount of service providers at a particular geographic region at a certain time and/or date. In this manner, information can be collected, stored, and maintained for future use (e.g., for price adjustment at a later time or for predicting future supply and demand for the service). For example, the data collected on Friday evenings can be useful in predicting supply and demand for future Friday evenings (e.g., can be used to determine trends). Forecasting future spikes in demand, for example, can be useful in making sure a sufficient amount of service providers are available at the future time to meet the high demands. UBER TECHNOLOGIES INC. 59 Source of image: Patent No: US 2013/0246207A1 by Uber Technologies Inc, System and Method for Dynamically Adjusting Prices for Services
  60. 60. Backup Slide: Surge Pricing System UBER TECHNOLOGIES INC. 60 Source of image: Patent No: US 2013/0246207A1 by Uber Technologies Inc, System and Method for Dynamically Adjusting Prices for Services
  61. 61. UBER TECHNOLOGIES INC. 61 Image from: http://www.cnet.com/news/uber-lyft-are-sinking-san-francisco-taxi-business/ Backup Slide: Increase vs Decline of apps to flagging
  62. 62. Backup Slide: Competition (Uber vs other apps) Uber FlyWheel Lyft Go-to Market Luxury/Private Cars/Existing Taxi Existing Taxi Private Car Marketing Strategy Free credits, celebrity endorsement, social media No surge, non-a****** alternative to Uber Branding(Moustache) Tools Smartphone Taxi meter, Smartphone Smartphone Payment Method Cashless Cashless Cashless Taxi Fare Cheaper than traditional taxi Traditional Taxi Fee Cheaper than traditional taxi Advance Booking Option NA Available NA User Experience Driver/Passenger Rating NA Driver/Passenger Rating Fare Sharing Uber Pool NA Line Lyft Surge Pricing No limit NA Cap at 200% i.e. 3x fare UBER TECHNOLOGIES INC. 62
  63. 63. UBER TECHNOLOGIES INC. 63 Image from: http://www.cnbc.com/id/102240065 Backup Slide: Competition (Market Share)
  64. 64. UBER TECHNOLOGIES INC. 64 Backup Slide: Competition (Uber vs Lyft)
  65. 65. Private hire license Commercial insurance UBER TECHNOLOGIES INC. 65 Back up Slide: Becoming Uber driver in Singapore

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