Uber is one of the world’s most successful technology companies. The company is the world’s largest taxi service without actually employing any taxi drivers. It matches passengers (riders) with drivers through a mobile phone app. However, the operating model involves a lot more than a platform. Starting in 2010, Uber operates in more than 250 cities and had a market capitalisation in 2016 of over $50 billion. Uber offers different levels of service. UberBlack is a limousine service, whilst UberX is a low cost service.
In a chosen city, Uber negotiates with regulators for access; recruits suitable drivers (the drivers are all self-employed); issues drivers with a smartphone and Uber’s software; trains drivers in how to use the software; markets the app to riders in the city; matches riders with drivers; enables drivers and riders to rate each other; and processes payments. The drivers take the rider to the rider’s required destination. As far as is legally permitted in each jurisdiction, Uber takes no responsibility for the quality of the taxi ride.
Drivers are the main suppliers to Uber, in addition, of course, to technology suppliers. But Uber’s success depends on other stakeholders as well. Uber launches with ‘influencers’ such as attendees at tech conferences who are likely to tweet about the experience. Uber is dependent on social media. Uber also needs good relations with city regulators or good lawyers when regulators resist the service.
Each city is a business unit. All the business units draw on strong central functions – finance, technology, human resources, marketing, legal, etc. The functions provide services and promote best practice sharing across geographies.
Uber focuses on big cities where its initial investment will pay back with subsequent traffic.
The central technology function, the platform that Uber uses and the app software that connects riders and drivers, as well as allowing dynamic pricing, group rides and ratings, are the company’s prime sources of advantage.