Ex-lawyer turned relationship coach

Is Uber A Failure?

Uber is the world’s biggest ride-sharing company and is suffering huge losses. In the first quarter of 2019 alone, Uber lost $1 billion.

What’s going on?

Uber is valued at $90 billion. And ‘taxi’ is such an outdated word it may as well be written in hieroglyphics.

Firstly, Uber is closer to Ebay than Amazon. It doesn’t own any cars. It doesn’t reimburse gas. It doesn’t cover insurance. Heck, it doesn’t even employ drivers. 

Instead, Uber runs an app that connects drivers with people who need a ride. And takes a 20% cut from every trip.

With so few expenses, Uber shouldn’t be burning billions of dollars.

Until you recognise that the ride-sharing service has almost no advantages over its competitors.

Actually, Uber is far less efficient than the competitors it’s running out of business.

And that’s part of the plan.

To offer the cheapest rates in the market, Uber pays a chunk of every fare with its $20 billion starter capital. 

An unsustainable long-term strategy, unless you can slowly squeeze the life out of your rivals before the money runs out and start a monopoly—similar to Amazon.

When Uber realised it didn’t have the funds to buy its way into power, the company went public and hoped for a cash injection from new investors.

Uber raised $8,1 billion and got valued at $100 billion. Despite its inability to generate profits.

Whether the new funds and annual revenue are enough to crush Uber’s army of competitors is doubtful.

UberEats helps. It offers another way for drivers to earn a buck during off-peak hours and increase profits.

But the problem stays the same: the market’s barriers to entry are few. 

Drivers don’t have a relationship with the customer. Whether you deliver people or food, you’re replaceable by anyone with a car. 

So when it comes to delivery, customers are only loyal to the price tag.

Plus, Uber’s image is in shambles. Its drivers reguarly go on strike. The company is known for breaking laws. And its corporate culture has a bad rep— multiple women have called out male execs for sexual harassment.

What will happen to Uber is anyone’s guess. But one thing is sure: the 10-year-old company is yet to turn a profit.

By Jeroen Elsing
Ex-lawyer turned relationship coach