Uber’s business model is straightforward: Match people who need a ride. Travis Kalanick and Garrett Camp originally wanted their idea to be a time-honored limo service that one could access via an app. Ubercab was tested with just three cars in New York the following year and officially launched in May. Since Uber drivers use their own cars, they have to pay all maintenance and repair costs associated with it. The design of the app and service is the most important reason why customers love Uber.
Scott D. Clary
Success Story Podcast Host | Founder/CEO OnMi Patch
In 10 years, Uber has become the world’s most expensive startup, with a valuation of $78 billion by 2020.
But what makes Uber so successful? Just because they offer an app that connects drivers to drivers? Or is there more than meets the eye?
This article explores what makes Uber a successful company by looking at three key factors: innovative solutions, stunt marketing, and profitability strategy.
Uber’s business model is straightforward: Match people who need a ride.
If you think this sounds like a typical cab company, you’re right. There is direct competition between Uber and traditional taxi services.
However, unlike taxis, Uber drivers use their own cars, so they have to pay all the maintenance and repair costs associated with it.
How did it start?
The idea of Uber was born in Paris in 2008. Travis Kalanick and Garrett Camp were at LeWeb’s annual technology conference.
After the event, they stood outside in the cold waiting for a taxi and were left without transportation.
Then an idea came. “What if you could ask for a ride from your phone?”
The answer to that will be the service we know as Uber.
Kalanick and Camp originally wanted their idea to be a time-honored limo service that one could access via an app.
The two went their separate ways, but Camp was so enamored with the idea that he went on to purchase the domain name UberCab.com.
Start of Ubercab
In the year In 2009, Camp worked on a prototype for UberCab when he was CEO of StumbleUpon. In the summer of that year, Kalanick was finally convinced to join UberCab’s “master incubator.”
Ubercab was tested with just three cars in New York the following year and officially launched in May.
A hard year
In July 2015, Uber became a highly respected startup when it was valued at $51 billion after another round of funding. In June 2016, Uber raised another $3.5 billion from Saudi Arabia’s sovereign wealth fund.
However, 2017 was a tough year for Uber.
Controversy started when a female engineer called out sexist culture in a blog post. Uber’s corporate culture was reportedly misogynistic and sexist.
The post went viral, and many people were fired as a result. Uber then conducted an internal investigation called a “handover investigation.”
Meanwhile, Kalanick resigned as CEO amid a shareholder revolt.
In January 2018, Uber’s valuation dropped from $70 billion to $48 billion.
Back to the right track
Less than two months after Kalanick confirmed his resignation, Dara Khosrowshahi was announced as the new CEO. In the year In May 2018, a new offer was made, valuing the company at $62 billion.
In the same year, Japanese conglomerate SoftBank Group and investors made a bid for 20% of Uber at a lower valuation period.
Reportedly, the deal gives Softbank 15%, and Uber gains a strong partner in Asia.
The secret of Uber’s growth
How did Uber do it all?
Uber started as an idea and grew from that idea to a billion dollar company that has weathered crisis and scandal.
What makes it so great that it spawned thousands of services based on the exact same concept?
The design of the app and service is the most important reason why customers love Uber. You can order a ride by simply pulling out your phone and tapping a button. The GPS on your phone shows where you are.
From the moment you enter the address into the app, the driver knows where you’re headed. In addition, it has your credit card information, so there is no need to exchange money between you and the driver.
Compared to the traditional taxi industry, just think of all the steps that have been removed.
For example, finding the phone number for a taxi company was already a big hurdle. After that you need to talk to the operator and give your address. Then a taxi will pick you up, but you never know exactly when it will come.
Additionally, you will need to use a manual payment method at the end of your trip.
To provide the best service possible, every company needs to minimize the steps their customers have to take.
With its technology, Uber provides the basic services of connecting people and on-demand payments to many. This technology represents the gig economy or technology-enabled on-demand services.
Word of mouth
There is no more advertising than word of mouth. That’s one reason you don’t see Starbucks ads everywhere—word of mouth is more than enough to work for them.
Since Uber is a new startup, it encourages its first customers to spread the word by giving them referral bonuses. So when their friends get credit for the referral, they get their first ride for free.
Uber calls itself a technology company, not a transportation service. For this reason, their drivers are considered independent contractors.
Accordingly, Uber drivers are not considered key inputs in Uber’s internal processes, but rather key partners.
If Uber drivers were Uber employees, they would have to pay more tax, and thus their customers would pay a higher price for it, so they would be less profitable.
Surprise and delight
When Uber introduces a new service or makes a major upgrade to an existing one, they often include some “gimmicks” with it.
That is why they are called the masters of “stunt marketing”. They avoid ambiguous signals, such as cat deliveries or the possibility of passengers hitching rides with celebrity drivers.
These strategies work well, especially in the age of social media, where buzz can easily be generated, and something can go viral in a matter of hours.
Uber has grown faster than traditional taxi services, mainly due to its use of technology. The company’s rapid success is based on the first “disruptive” business model and the use of new technologies such as smartphones.
Also published by: https://newsletter.roioverload.com/p/how-uber-became-the-worlds-most-valuable
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