Professional Documents
Culture Documents
UBER Case Study 2015 PDF
UBER Case Study 2015 PDF
1. Seed Funding- $200K on Aug 1 by founders Garrett Camp and Travis Kalanick.
2. First Round-$1.3M in Angel funding on Oct 15, 2010.
3. Series A -$11M on Feb 14, 2011 lead by Benchmark and partner Bill Gurley.
4. Series B - $37M on Dec 7, 2011 lead by Menlo Ventures and Benchmark.
5. Series C - $258M on Aug 23, 2013 lead by Google Ventures And Benchmark.
6. Series D-$1.2B on Jun 6, 2014 lead by BlackRock And Google Ventures.
7. Series E-
a. $1B on Feb 18, 2015 by Foundation Capital, Times Internet.
b. $1.6B / Debt Financing on Jan 21, 2015 by Goldman Sachs.
c. $600M on Dec 16, 2014 by Baidu.
d. $1.2B on Dec 4, 2014 by Lone Pine Capital, New Enterprise Associates, Qatar
Investment Authority, SherpaCapital, Valiant Capital Partners.
The company could further raise $1.5 to $2 B in funding and raise its valuation to $50 B.
Revenue Generation Model
Uber has three main pricing structures-
1. Fixed airport rates- For example, the fixed airport fee from downtown Chicago to
Midway is $65 and $75 to O’Hare, slightly less than two times that of cabs.
3. Surge pricing- meaning that during times of high demand, Uber raises its prices up to 8
times the base fare. It uses surge pricing not only to exploit demand but to increase supply.
This pricing structure does not differ much from other car services but the convenience factor
Uber India is experimenting with all different type of payment options. They started with
credit card payment option which was revoked by RBI as they were not following two factor
authentication or pin based authentication for payment. Actually Uber was using a loophole
in payment system, where pin or other authentication was not needed for foreign
payments.
Paytm Wallet
Then Uber India came with online wallet option with Paytm wallet which became quite
successful and paytm gained a lot of new customers, and uber lost of enough money in fake
account and real free rides worth Rs 600/- each initially. People used th fake account till the
uber didn't stop banning their account.
Cash Payment
Then Uber came with Cash payment system in Hyderabad, soon it will be rolled to other
cities if successfull in Hyderabad. Cash system is costing uber in revenue in trip cancellation.
They have no way to charge customer if customer refuses to take ride even after given 5
min grace period of cancellation.
Credit Card Payment
Now Uber is again here with Credit Card payment with two factor authentication like all
other merchant sites have. This time is as safe to use credit card with Uber as any other
website for e-commerce or any payment system in india.
The company usually keeps 20% of the revenue collected and rest with the drivers.
Many of the drivers are earning anywhere between Rs 75,000 and Rs 1 lakh per month.
Take the case of Lokesh R in Bengaluru. His income, he says, goes up to as much as Rs 1.25
lakh in some months. “On an average I earn around Rs 80,000 per month and if there is some
luck on my side in terms of faster pick-up, my earnings can beyond Rs 1 lakh,” he said. Before
the advent of these taxi-hailing services he was making somewhere around Rs 15,000-20,000
a month.
MARKETING STRATEGY
Uber’s business strategies mimic successful technology firms much more than transportation
firms. From the beginning, Kalanick did not want Uber to be viewed as a typical cab or car
service. He saw a largely unperceived opportunity to revolutionize a technologically stagnant
industry. Kalanick uncovered a way to use his employees’ technological abilities and
innovativeness to challenge the way the transportation industry works, which has left
established firms vulnerable to the Uber experience.
Uber came out of nowhere in India and made waves in a notoriously moody market
surprising the regulators, police and its competitors.
The secret of its fleet-footed business model was a killer phone application that made it
easy to book, track and pay for rides and tiny management teams which would target new
cities.
Uber would generally use three people to launch in a new city: one local CEO or general
manager, one community manager for marketing and customer support and one operations
manager for recruiting training and managing drivers. With a few extra support staff, Uber
was running India with only 40 employees in recent months, managers said.
The small teams would usually work out of temporary offices. Their base in Delhi for
example was three rooms in a small hotel in a New Delhi suburb.
To generate buzz, Uber held posh launch parties on the roofs of the Oberoi in New Delhi and
Four Seasons Hotel in Mumbai. In the first months of service Uber’s new customers gushed
as they were chauffeured around in Mercedes, BMW and Audi cars.
Its streamlined management teams would recruit drivers and train them on their system
that uses smartphones. Drivers said all they needed was the right paperwork and a few
hours of training to get on the Uber system.
As word spread that drivers could join Uber easily, make good money and get paid weekly—
a rarity in India–the number of drivers switching to Uber exploded. Some drivers said they
had even taken loans to buy new cars to become part of the system.
Uber used its popularity to roll out a medium-priced service and then an even cheaper car
service called that cost less than a ride in a three-wheeled auto rickshaws. With local
lenders, it even started offering loans to drivers that wanted to get new cars.
Technology
Technology can be divided into two components, the app technology for
consumers and the demand calculation technology at the firm. The app
technology is available for iPhone/Android devices and uses GPS from the
the area. Uber calculates the nearest driver and plots your pickup time
“God View”, which displays all the active Uber drivers and
pending customer requests in real time to ensure quality is maintained on the system (see
above).
“Surge pricing”— meaning that during times of high demand, Uber raises its prices, often
sharply—the company has been accused of profiteering and exploiting its customers. When
Uber jacked up prices during a snowstorm in New York last December, for instance, there
was an eruption of complaints, the general mood being summed up by a tweet calling
Uber “price-gouging assholes.”
In most cases, after all, dynamic pricing is a way for companies to maximize profits by
exploiting demand—charging higher prices to people who can and will pay more. As MIT
professor Yossi Sheffi has put it, it’s the “science of squeezing every possible dollar from
customers.”
That’s because most industries that use dynamic pricing have a limited inventory (an airline
flight has a set number of seats, a hotel a set number of rooms) and are trying to make as
much money from selling that inventory as possible. Uber’s case is different. While the
company also wants to make as much money as possible, it uses surge pricing not only to
exploit demand but to increase supply.
NISHANT AGARWAL
2014EE10464