Instead, it’s its ability to apply its vast data trove and routing software to rewrite how goods and people move from one place to another, using computer algorithms to remove what tech sees as inefficiencies in the world.
Uber’s biggest competitor isn’t rival ride-hailing service Lyft, analysts say, but Amazon, which moves goods all over the world. It has budding businesses such as freight forwarding, food delivery and even package delivery.
Uber’s listing had a rocky start on the New York Stock Exchange with its share price dropping on its first day of trading. But even at the low end of the price range, its listing was the ninth-largest US IPO of all time and the biggest on a US exchange since Alibaba Group Holding’s $25billion global record holder in 2014, according to Bloomberg’s data.
But there are questions about whether Uber can execute on its vision. For one thing, it hasn’t yet been able to solve the problem of food arriving cold on delivery.
Uber uses data gathered from Uber Eats, its food delivery service, to help predict food preparation time for its routes, and provide food and restaurant recommendations for customers, the company said. But the business ran into issues - food not being ready on time, a lack of parking for drivers who run in to fetch orders, often resulting in parking tickets, and food that arrives at the customer late or cold.
“We’re barely scratching the surface when it comes to huge industries like food and logistics, and how the future of urban mobility will reshape cities for the better,” Uber chief executive Dara Khosrowshahi said.
Like many tech companies, Uber frequently refers to itself as a “platform”, to convey the idea of a foundation upon which other things are built.
“They’re thinking about moving things around more broadly, including humans,” said Gene Munster, the founder of venture capital firm Loup Ventures. Beyond Eats, which took in $1.46 billion in revenue last year, Munster pointed to shipping under Uber Freight, which lines truckers up with loads to ship to destinations around the country.
“Just how well they can maximise the routes is critical,” he said.
Just as critical will be Uber’s ability to spin large new businesses out of its data and routing savvy. Uber Eats, for instance, accounted for only 13% of Uber’s revenue last year.
The company is weighing a revamp of the division as part of a broader effort called Eats 2020, in which regular customers, who average 1.5 orders a week on Uber Eats, could be compelled to order 19.5 meals weekly, suggesting nearly every meal would be prepared and delivered to them.
From the moment Uber launched as a black car service in San Francisco in 2010, its algorithms have been using data gathered from passenger trips to give it a computer-assisted advantage over competitors, Uber said.
However, with high costs to pay its millions of contracted drivers, it loses money on each ride. Uber subsidises fares with massive infusions of investor cash, but such cash burn will draw more scrutiny when it is a publicly traded company.
That marks the biggest contrast with Amazon, which has ploughed back much of its cash into new products and services that have tangible value, like the Alexa voice service, Kindle reading devices and a network of warehouses.
- The Washington Post