Uber is bouncing back, not going under
Kalanick is not gone, he is just taking a well-deserved break.
There are a lot of voices saying Uber will die now. Well, it won’t. There is one huge reason for it: CUSTOMERS LOVE UBER. And they spent $20 billion in 2016 on Uber services. Everything else is just logistics and Uber executives need to take care of. But luckily for Uber — that’s not a rocket science.
The comfort Uber has is similar to the one Tesla has after receiving orders topping $10 bln for Tesla 3. While bosses of every company in this world cannot sleep at night thinking how to make people pay for their products or services, CEOs of Uber and Tesla only need to consider how to organize and deliver.
Customers love Uber because:
- Ordering a car has never been easier than tapping 2 buttons;
- Uber arrives fast (only in 2 minutes);
- They feel in control monitoring in the app when their Uber-cab arrives;
- Uber is a car, which doesn’t need repairs.
- There’s no worrying about parking spots.
- When travelling with a driver you can spend your time productively — reading, answering emails, watching videos, etc.
All this for a lower fare as compared to taxis or (as some say) to owning a car.
Also to everybody portraying Uber and Kalanick as devils — don’t forget the good they brought to us: http://www.foxnews.com/us/2015/08/18/study-shows-uber-other-ride-sharing-services-lower-drunk-driving-deaths.html
The only real issue Uber has
Is that $2,8bn gap. Profits are what companies exist for, not anything else. And I’m writing his respecting all women in the world and emphasizing sexual harrassment should not happen anywhere. Corporate culture is extremely important, but even the best practices cannot make up for financial losses. There are plenty companies where nobody is harrassed, but the business is not making money and this is why it goes down.
As a remainder here are some Uber’s 2016 numbers:
- $20bn — total revenues (revenues from bookings)
- $6,5bn — revenues minus service cost (drivers’ payouts)
- $2,8bn — net loss.
So Uber only needs to adjust a bit. Either by slightly increasing fare cost or by reducing drivers’ payouts or by finding out how they spent $9,3bn in 2016 and making cuts there. I have zero idea how they are spending their money, but that could be either oversized employment or unnecessary driver benefits or unnecessary marketing spendings, anything. But definitely plenty of room to search for savings. Especially that their business seems to be quite simple and highly-automated: there’s just one mobile app, servers for it and that’s it. So it shouldn’t generate government-size costs.
Whatever Uber executives do, will be “unpopular” among either customers or drivers or employees. Typical job for the Interim Manager. He will take all burden for his decisions and then he’ll be gone. VCs will be happy, customers will continue to be happy, drivers will be happy, financials will be sound. Kalanick also will be happy, because once Uber IPOs he’ll become a billionaire — he has only quit a position, he did not get rid of his shares after all.
The pressure from VCs? Sure it was there. Probably they threatened Kalanick they will not give a dime in the next funding round unless he resings. But even Kalanick surely understands financial gap went too far and a change is required to bury it.
Besides, together with his co-founder friend he still holds deciding power in the board, so he can put him back as a CEO anytime he wants. If he wants to…