Uber Is An Unstoppable Force

Travis kalanick uberChris Ratcliffe/Bloomberg via Getty ImagesTravis Kalanick, chief executive officer of Uber Technologies Inc., speaks during the Institute of Directors (IOD) annual convention at the Royal Albert Hall in London, U.K., on Friday, Oct. 3, 2014.

The past few months have been a PR nightmare for Uber.

In November at a dinner for “influencers,” an Uber exec named Emil Michael suggested the company could theoretically dig up personal information on reporters who are critical of the company. BuzzFeed’s editor-in-chief Ben Smith reported on the comments.

BuzzFeed also reported that a New York City Uber executive had tracked one of BuzzFeed’s tech reporters without her permission, a breach of Uber’s privacy policy, which was posted to Uber’s website in light of these incidents. The executive in question, Josh Mohrer, was investigated for spying on the BuzzFeed reporter, and according to Uber has since been disciplined for his actions, but has kept his job.

And then there was more troubling privacy news: An Uber interview candidate in Washington, D.C. was reportedly given access to Uber’s rider database, which is full of sensitive information, for hours after his interview was over, the Washington Post reported. While researching for a story about the company, San Francisco magazine editor Ellen Cushing was allegedly warned by Uber employees that Uber might look at her rider logs, too.

Senator Al Franken (D-Minn.), chairman of the subcommittee on Privacy, Technology, and the Law, voiced privacy concerns about Uber in an open letter to CEO Travis Kalanick. Cult of Mac reported that Uber’s Android app could be collecting an alarming amount of users’ personal data. New York City tech startup founders and serial entrepreneurs who spoke to Business Insider in the days following BuzzFeed’s reports were adamant about Michael or Kalanick stepping down.

But Uber hasn’t just upset press and people concerned about user privacy — drivers across the country have also protested the company since September.

They’re upset by Uber’s competitive pricing, which affects drivers’ incomes. Some say they’re barely making minimum wage. They don’t understand why Uber hasn’t integrated a feature to let them accept tips from customers. They’re terrified of Uber’s five-star rating system, and say that even one bad rating could be enough to knock them out of Uber’s driving system and prevent them from driving for the service in the future.

At the end of November, Uber quietly pulled a blog post on its website that examined a link between prostitution and Uber rides. The post examined how Uber’s ride data meshed with crime statistics.

Some of Uber’s customers aren’t very happy, either. An Uber customer filed a class-action lawsuit against the company earlier in 2014, alleging that Uber misleads its customers about how it shares tips with drivers. Complaints about Uber’s surge pricing model — in which the company charges a fare multiplier during Uber’s busiest hours — has caused the Better Business Bureau to give the company an ‘F.’

Most recently, Uber has had trouble in terms of national and international growth. Amid regulatory concerns, Nevada became the first US state to suspend Uber’s operations. Portland, Ore., is suing Uber after four days of illegally operating in the city. Portland declared Uber an “illegal, unregulated transportation service.”

Uber’s having a different set of challenges in other countries, especially Germany: Uber’s services aren’t taking off there in part because the country’s taxis are Mercedes, and thus are much nicer than a typical taxi. Germans don’t seem enticed by a service like Uber even if it’s much cheaper. In addition, courts in Hamburg and Berlin upheld a ban on the service in September, saying that Uber doesn’t comply with German laws.

A Dutch court also ruled this week that in the Netherlands, Uber can’t work with unlicensed drivers (drivers with licenses and drivers who don’t seek payment can still legally operate, however).

Sometimes, Uber’s drivers are a liability to the company, too. An Uber driver in San Francisco has been charged with vehicular manslaughter after killing a six-year-old girl in San Francisco on New Year’s Eve last year. In September, an Uber driver was accused of smashing a passenger in the head with a hammer and driving away. That same month, an Uber driver in Orlando was accused of groping a female passenger and then blaming it on the way the woman was dressed.

Uber was also banned in Delhi this week after an Indian driver allegedly raped and beat a female customer. The driver had been arrested three years ago for another sexual assault and was later acquitted, but he was still allowed to drive for Uber. In light of the allegations in India, Thailand decided to ban Uber’s operations too.

Despite all this, Uber is not down and out. In fact, there has probably never been a better time to be Uber than right now.

Just last week, Uber announced the company had raised a $US1.2 billion round of funding at a $US41 billion valuation. Since its founding in 2010, Uber has raised an astounding $US2.7 billion. By comparison, Uber’s closest competitor, Lyft, has raised $US332.5 million.

And Uber is playing this car service startup game for world dominance. The company hired David Plouffe, who headed up Obama’s presidential campaign in 2008, to oversee Uber’s city-by-city regulatory battles. Uber is now available in over 250 cities worldwide.

With its latest round of funding, Uber has two main goals: to create a million new jobs next year, and to set its sights set on Asia, where competitors like the SoftBank-backed GrabTaxi and Singapore’s Temasek Holding-funded Didi Dache are also trying to take advantage of a relatively untapped market.

Uber has made some smart hires besides just David Plouffe. Brad Moore, who brought Apple Maps to the iPhone and the Apple Watch, was hired by Uber in November and serves as the engineering manager for the “Mobile Core Experience,” according to his LinkedIn page. Uber also hired former Lyft COO Travis VanderZanden in October to help oversee Uber’s international growth. Lyft’s former VP of operations, Steve Schnell, also defected to Uber.

Still, Kalanick is aware of his company’s reputation. In Uber’s most recent funding announcement, he said as much, addressing Uber’s recent controversies by saying:

This kind of growth has also come with significant growing pains. The events of the recent weeks have shown us that we also need to invest in internal growth and change. Acknowledging mistakes and learning from them are the first steps. We are collaborating across the company and seeking counsel from those who have gone through similar challenges to allow us to refine and change where needed.

Investors are going crazy for Uber. Some of Uber’s earliest markets are basically minting money, generating hundreds of millions of dollars in revenue annually. In November, Business Insider obtained an internal Uber presentation that was created in early 2014. Most of the data is just from December 2013, but even so, the data within the document gives every indication that Uber is far from being done growing.

In its biggest cities — Washington, D.C., New York City, Chicago, San Francisco, and Los Angeles — Uber had more than 100,000 trips per week as of last December. Here’s Business Insider’s Alyson Shontell:

In December 2013, Uber generated about $US11.7 million in Washington, D.C. (a ~$US141 million annual run rate). It generated $US26 million in New York City, or an annual run rate of $US312 million. In Chicago, Uber generated $US12.7 million for a run rate of $US152.4 million. In San Francisco, Uber generated $US17.7 million, a run rate of $US212.4 million. Los Angeles generated somewhere between the revenue of New York and San Francisco.

These run rates would generate about $US1 billion a year, and that figure is derived without taking into account Uber’s growth in 2014. Year over year from New Year’s Eve 2012 to New Year’s Eve 2013, Uber’s growth rate was a whopping 369%.

Sources close to the company have said Uber’s gross revenue is expected to hit about $US10 billion by year’s end. Since Uber keeps 20% of gross profit and the rest goes to its drivers, Uber would be netting about $US2 billion in net revenue.

Business Insider’s Henry Blodget adds that Uber’s revenue growth rate is 300% this year, and next year it’s expected to be another 300% gain. Blodget also says investors expect the company to IPO at a valuation of $US50 billion to $US100 billion in the next few years. For comparison’s sake, Facebook achieved Uber’s $US41 billion valuation in its seventh year — which was two years before Facebook went public in 2012.

Besides disrupting the transportation market, Uber has a huge opportunity to break into other on-demand services. For instance, Uber launched UberFRESH, a meal delivery service, in Santa Monica in August. This summer, Uber announced it would be testing an on-demand convenience store goods delivery service called “Corner Store” in Washington, D.C. Uber also launched “Uber Rush” in New York City this year. It’s a courier service not unlike Postmates that relies on on-foot and bike messengers to get your packages from point A to point B.

Uber has had its share of negative press recently. But if the company can overcome regulatory hurdles, privacy concerns, its often problematic company culture, and lawsuits — and it certainly can — Uber is poised to become one of the most successful tech startups of all time.

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