A few short years ago, Travis Kalanick and Garrett Camp were stranded on the side of a snowy Paris street. The two had been contemplating ideas for their next great start-up. They also needed a cab badly. Arriving back in San Francisco shortly afterward and two years later, Uber was born.
The app-enabled, push button taxi service has a valuation of over $50 billion dollars. After 5 years, Uber operates in over 300 cities. Paris became Uber’s first major expansion outside of the U.S. with London following close behind. As one can imagine it is not hard to get a taxi these days in the capital of France.
Disruptive innovation is happening everywhere and in every industry. Several decades ago, Microsoft disrupted the fledgling computer space, building software that took over the hardware function. Amazon has completely upended retail both online and brick and mortar, on a global scale.
Uber invaded the antiquated taxi system, using local drivers who know the streets. Supply and demand is Uber’s strategy when it targets a city. There are plenty of local drivers to handle any local supply. This eats up any of the other services including taxis, Uber is cheaper. The Uber driver is ready to roll, wherever you want when you get in the car.
Violent flash-points were everywhere in London and Paris in the initial stages of the service. Cabbies were rioting in the streets, Uber drivers lured to remote areas and then beaten. Legislations were popping up everywhere. Kalanick countered this unrest, by a complete transparency platform. The past five years, Uber has experienced its share of growing pains. Uber has also seen explosive growth, making it the most valuable startup in the world. There are over 160,000 drivers in the United States alone, with some cities doubling their amount of drivers every six months. Uber takes 20 percent of every ride plus a booking fee. Bottom line: Uber can end up making as much as 45% on every ride.
The Uber fare algorithm is complicated. Matching a nearby driver to a particular passenger in a certain city has many different variables. Here is a page from Uber help that explains it. After downloading the app and installation, the rest is rather simple. You are asked to verify your phone, email address, then input a credit card. When you find a destination point, two offers are made available. The UberX, which lets you have up to four riders, then the UberXL allows up to six riders. Other ride types are UberPool, which is an add-on ride and UberSelect, a larger car type of ride. Here is a desktop fare calculator. You can lower the cost of your ride by finding and using Uber discount codes.
A point to make concerning pricing is the use of Uber’s Surge Pricing. This is simply taking advantage of peak time, some Riders feel this unfair, it is not. Peak time or Surge Pricing is not unlike any other industry; has anyone tried to buy a popular toy at Christmas? It is a hard item to find, or you pay extra from people who already purchased the item and are now re-selling it.
The future for Uber, perceived as limitless by many venture capitalists. Any type of A to B transport is in their crosshairs. The ride-sharing company recently acquired Jump, an e-bike sharing company in New York City. Uber is currently working Jump’s assets and six-city network of users into the app. Mass-transit and peer to peer sharing is on the table. Self-driving cars are still in the works and may happen sooner rather than later. Uber’s CEO has indicated a fleet of autonomous vehicles could hit the road in 18 months.