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Home Startup Stories Uber Business Model and Uber Revenue Model

Uber Business Model and Uber Revenue Model

The Uber App has made commuting much more comfortable with a tap on your phone thus gone are the days where we had to wait for an auto or cab. The Uber business model, revenue model, how Uber hires drivers, How uber makes money and uber success story is discussed here.

About Uber:

Uber full form is Uber Technologies Inc. This is a multinational company that offers ridesharing, food delivery (Uber Eats), etc. Uber business model is an on-demand transportation service that connects drivers with riders.

Uber has its headquarters in San Francisco. It is spread worldwide, which is present in almost every important metropolitan city. Uber is accessible to the common man through its website and mobile app. Uber business model is one of the highly valued startups with many competitors at its side. By 2019 it was estimated that Uber roughly had 110 million users worldwide. According to The National Bureau of Economic Research, it is estimated that, in 2015, the Uber business model reached a consumer surplus of $6.8 billion. Uber currently operates in 58 countries, with over 19,000 employees and three million dedicated drivers.

How did uber start?

In December 2008, 2 friends named Travis Kalanick and Garrett Camp were stranded on the roads of Paris, unable to find a cab, after attending the LeWeb – annual tech conference. They both worked on the idea of Uber. Camp returned to San Francisco, and he bought the domain name UberCab.com. The name Uber means “above all the rest.” in the German language. Camp had persuaded Kalanick to join as Uber Cabs ‘Chief Incubator.’ In March 2009, they developed it into a smartphone app, which helped people to book a ride with the tap of a button. The official launch of the Uber business model took place in San Francisco in the month of May.

On July 5, 2010, the first Uber ride happened wherein the rider requested a trip across San Francisco.

Here is a short story of how Uber began hiring its first set of employees. Kalanick sent a note out on Twitter – looking for skilled management help. 

Kalanick – “Looking 4 entrepreneurial product mgr/biz-dev killer 4 a location-based service.. pre-launch, BIG equity, big peeps involved-ANY TIPS??”

Graves (in response at 5:17 PM on January 5, 2019) “Here’s a tip. email me :)”

Ryan Graves responded to the Tweet and joined Uber, one of the first to be employed; he was Uber’s General Manager and became CEO of Uber in August 2010. In December 2010, Kalanick was appointed as the CEO, while Graves took over the role of COO and board member.

In October 2010, the company was filed with a cease-and-desist order. The main issue cited in the order was the usage of the word “cab” in UberCab’s name. UberCab was changed to Uber, and they bought the Uber.com domain name.

In December 2011, Uber was launched internationally.

In August 2014, Uber came up with the idea of UberPool, where riders who were traveling in the same direction were pooled in and could share a ride and the cost. This idea also helped in less traffic congestion during peak hours and less pollution in the cities. Due to the current COVID – 19 pandemic, Uber has announced the cancellation of POOL rides to stop the spread of the virus and keeping the safety of its riders in mind. The main competition for Uber is its rival Lyft. 

Uber faced many criticisms because of its sexist attitude at the workplace and several backlashes, which resulted in scandals. This affected the job of many employees, and nearly 20 staff members were fired. Uber was hit with a complaint of sexual harassment at the workplace. The former U.S. Attorney General Eric Holder investigated the case. On June 21, 2017, Kalanick resigned from his post of CEO. After two months, Dara Khosrowshahi was announced as the CEO, then-CEO of Expedia. Khosrowshahi moved to New York in 1978 so that he does not bear the brunt of the Iranian revolution. Before becoming the CEO of Expedia, he was the CFO of IAC/InterActiveCorp (IAC).

In December 2017, Barney Harford, former CEO of Orbitz, was appointed as Uber’s chief operating officer.

Uber business model canvas
uber business model canvas

How to book Uber Cab?

A passenger has to download the app from the Google Play Store and create Uber account.

  • Open the Uber app, 
  • Type the exact pickup location 
  • Click on the request for a Cab
  • Board the cab once it arrives, and 
  • Quickly pay the fare for the ride.

Within 15 seconds, Uber connects you with the driver, who is the nearest to you. The fare charged is based on the route taken and the demand for rides at the time that the ride is requested. Payment is made via credit-card or Google Pay, Apple Pay, PayPal, cash, or, in India, Paytm, Airtel mobile wallet. Waiting charges are also included if the driver has to wait for a few minutes after arriving at the pickup point. You might be wondering, isn’t this an invasion of privacy. But Uber mentions it very clearly in a section of its privacy policy for U.S. customers and drivers reads:

Uber uses your personal data in an anonymized and aggregated form to closely monitor which features of the Service are used most, to analyze usage patterns, and to determine where we should offer or focus our Service. We may share this information with third parties for industry analysis and statistics.

There have been scenarios where a ride in a crowded space can reach up to twice the usual fare of that simple ride. For example, on January 1st, 2011, in New York, a journey of one mile surged from $37 to $135.

How does uber hire drivers?

An essential requirement is a skill to drive a car, a driving license, and a car. Most of the Uber drivers use their cars while some drivers rent or lease a car to drive with Uber. The next requirements are age, good physical and mental health, car type, and its working condition, a smartphone or tablet, and also pass a background check. In addition to this annually, the vehicle must also pass safety inspections, and it is a must to have the Uber emblem posted on the window. The Uber driver app helps the drivers to receive and accept requests for pick up and drop.

Main services :

  • UberX is the premium service provided by Uber wherein the rider can opt for a private ride with up to 4 passengers. UberX and UberXL cars which give more safety preferences for children aboard with child safety seats.
  • Uber ASSIST provides services to senior citizens and people with a physical disability.
  • UberWAV is specially designed, which are wheelchair-accessible vehicles.
  • Uber BLACK is the option where the rider can rent a black luxury vehicle.
  • Uber comfort comes with newer cars less than five years old and offers additional legroom.
  • Uber Green, which is available in Europe, allows the rider to rent an electric car equal to the fare of UberX.
  • Uber Hire, which is available in India, will enable riders to hire a vehicle for local travel.
  • Uber MOTO, which is available in India, Indonesia, Pakistan, Bangladesh, and the Dominican Republic, allows riders to travel by motorcycles. 
  • Uber Van, which is available in Europe, allows a group of up to 6 people to ride together.
  • UberAuto, which is available in India, Sri Lanka, and Pakistan, provides riders with cheap rides by auto rickshaw.

Other goodwill services by Uber:

  • In July 2012, Uber gave its riders the option to avail icecreams on-demand. This was available in 7 cities across the U.S.
  • In October 2013, UberKITTENS was launched in the U.S., keeping the idea of giving riders a snuggle time with a cat. This benefited local animal shelters across the U.S. Uber Pet allows a rider to carry his/her pet along.
  • In May 2014, UberSpringCleaning, with the help of riders, requested on-demand donation pickups and gave 5,000 pounds of clothes for the needy.
  • In June 2014, in California to commemorate the first anniversary of marriage equality, UberWEDDING helped eight couples and supported the LGBTQ+ community.
  • In September 2014, UberMILITARY was created when Former Secretary of Defense Dr. Robert Gates, joined hands with Uber. 50,000 military personnel and their family members were able to earn money by driving with Uber.
  • In December 2014, Uber extended their support to No Kid Hungry and donated 5 million meals to hungry children in need.
  • In April 2015, Uber Eats was launched in Chicago, LA, and New York City to bring food at the doorstep.
  • On December 30, 2015, Uber reached 1 billion.
  • In May 2017, Uber Freight was launched, which bridged the gap between trucking companies and their drivers with shippers.
  • In March 2018, Uber Health was introduced to help patients to reach the hospitals on time and not miss their doctor’s appointment.

Uber began as a small startup, and it slowly climbed up the ladder and became a success in San Francisco and expanded to other parts of the world. Uber is not just an app to book a ride; it changes the way people and goods move around the world, helping to reduce traffic congestion and pollution. 

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